AEP is slowly moving from coal to natural gas

January 24, 2013
Shale Play


Shale Play

ST. CLAIRSVILLE, Ohio - Citing Ohio's deregulated electricity market and an increasing shift toward natural gas-fired power plants, American Electric Power is eliminating jobs in the Upper Ohio Valley.

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"AEP is a regulated electric utility, with the vast majority of our operations and earnings tied to rate-regulated electric utilities," said Nicholas K. Akins, AEP president and chief executive officer. "But Ohio's move to enhance electric market deregulation will shift much of AEP's Ohio generation into a separate competitive business."

"We are redefining our organization to better address the business challenges we face today and potential opportunities in the future," he added.

As AEP seeks permission from the Public Utilities Commission of Ohio to charge customers in the state $61.8 million for repairs associated with massive failures that took place during a June 29 storm, the company's restructuring efforts will leave some local employees looking for new positions.

"The process will go through the end of January - we will not know the total number affected until February," said AEP spokeswoman Melissa McHenry. "These people will have the opportunity to apply for other jobs within AEP."

McHenry emphasized the difference between AEP, the parent company, and AEP Ohio, its local operating subsidiary. Other operating subsidiaries under the AEP banner are AEP Texas, Appalachian Power, Indiana Michigan Power, Kentucky Power, Southwestern Electric Power Co. and the Public Service Co. of Oklahoma.

McHenry said that by 2015, AEP Ohio will be "phased out as an owner of regulated generation" in the Buckeye State, but said customers would still be able to receive electricity from AEP.

"Our customers can now choose who they want to purchase power from," she said. AEP now serves most of the Upper Ohio Valley, with the exception of customers in Hancock, Brooke, Wetzel and Tyler counties. These residents receive electricity from Mon Power, a subsidiary of FirstEnergy.

McHenry also cited plans to close some coal-fired power plants, such as the Kammer Plant south of Moundsville, as a reason that AEP will not need so many local workers. Another reason, she said, is the ongoing push to generate more electricity from natural gas.

"Because of low natural gas prices, people are able to come in to offer rates that may be lower than our rates," she said.

According to the AEP website, the company now operates natural gas-fired plants in Waterford, Ohio, Dresden, Ohio, and Lawrenceburg, Ind. It now generates roughly 16 percent of its power from natural gas.

As the Utica and Marcellus shale drilling industry expands across Ohio and West Virginia, the supply of low-cost fuel for power generation is likely to increase, as long as exploration continues at its current clip.



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