AEP Construction Program Largest in the Industry, Second Largest in the Nation

American Electric Power’s aggressive program to install emissions-reduction equipment on its existing plants and build new generation facilities has grown to become the largest in the utility industry and second largest in the nation.

The company’s construction program was ranked the second largest in the United States and the largest in the utility industry, based on capital invested, in a Nov. 26, 2007 report from Engineering News-Record.

Only Alcoa had a larger construction program during the same period. In 2007 alone, AEP completed installation of advanced emissions-control equipment on 3,500 megawatts of coal-fueled generation and started and finished construction of a 340-megawatt gas-fueled power plant.

“By the end of 2007, we’d completed more than two-thirds of the massive $5.1 billion program that we began in 2004 to reduce emissions from our existing coal-fueled generating fleet. We also built a 340-megawatt, natural gas-fueled power plant in Arkansas in record time. It’s a testament to the diligence of our employees and the skills of the thousands of contractors who’ve worked with us that we’ve successfully managed one of the largest construction programs in the country and completed all of the work on time, or ahead of schedule, and on budget,” said Michael G. Morris, AEP chairman, president and chief executive officer.

AEP’s capital investments for generation and environmental retrofits in 2006 and 2007 totaled more than $3.8 billion, with a significant portion committed to installing emissions reduction equipment on AEP’s generating fleet in West Virginia and Ohio. In West Virginia, AEP completed installation of flue gas desulfurization systems, or scrubbers, to reduce sulfur dioxide emissions and a selective catalytic reduction system (SCR) to reduce nitrogen oxide emissions on 1,600 megawatts of generation at the company’s Mitchell Plant in Moundsville. AEP also installed a scrubber on its 1,300-megawatt Mountaineer Plant in New Haven. This work totaled more than $1.5 billion and provided in excess of 4,800 temporary construction jobs over the two-year timeline of the projects. Additionally, 121 permanent jobs were added at the two plants, 55 at Mitchell and 66 at Mountaineer.

In Ohio, AEP completed installation of a scrubber on a 600-megawatt generating unit at the Cardinal Plant in Brilliant. The Cardinal Unit 2 scrubber and associated projects totaled approximately $285 million and provided approximately 1,000 temporary and 56 permanent jobs in the area. Cardinal Unit 2 is owned by Buckeye Power but operated by AEP. AEP is finishing a second scrubber on Cardinal’s Unit 1 that will be operational this spring. Cardinal Unit 1 is owned and operated by AEP.

AEP’s newest power plant, the Harry D. Mattison Plant, located in Tontitown, Ark., also came on line in 2007. Two of the four simple-cycle, natural gas-combustion turbines were operational in July 2007. Two additional units came on line in December 2007. The $131 million plant was completed nearly a year ahead of schedule and provided 250 temporary construction jobs and three new permanent jobs.

“Having two units of the Mattison Plant on line last summer significantly reduced the need to purchase electricity on the open market to serve our Southwestern Electric Power Company customers on days when demand and prices were the very highest,” Morris said.

AEP’s construction program will continue in 2008 as the company moves forward with work already in progress to install emissions reduction equipment at three additional plants. AEP is installing scrubbers on three generating units at Amos Plant in St. Albans, W.Va., has begun work on a third scrubber at Cardinal Plant, and is installing a new scrubber, upgrading an existing scrubber and installing an SCR at Conesville Plant in Conesville, Ohio. The Conesville Unit 6 scrubber upgrade will be completed in 2008. The new Conesville Unit 4 scrubber and SCR should be on line in 2009. The Amos scrubbers will be completed in 2009 and 2010, and the third Cardinal scrubber (owned by Buckeye Power) will be operational in 2010.

Additionally, AEP will complete 340 megawatts of new simple-cycle, natural gas-fueled generation in Oklahoma in 2008, 170 megawatts at its Riverside Plant in Jenks and another 170 megawatts at its Southwestern Plant near Anadarko. The company also will begin work on a 480-megawatt, combined-cycle natural gas-fueled plant in Shreveport, La., and initiate completion of the 580-megawatt combined-cycle natural-gas Dresden Plant in Dresden, Ohio. Both plants are scheduled to be on line in 2010.

AEP also anticipates finalizing approvals and beginning work on its proposed 600-megawatt baseload coal-fueled plant in Hempstead County near Texarkana, Ark., in 2008. The company recently received construction approval from the Arkansas Public Service Commission for the plant. Other regulatory approvals are pending. AEP continues to work to obtain approval to build two 630-megawatt Integrated Gasification Combined Cycle (IGCC) clean-coal plants, one in New Haven, W.Va., and another in Great Bend, Ohio.

“Our vast construction program and associated capital investment will continue well into the next decade. We’ve planned capital expenditures in excess of $3 billion each year through 2010, and as we wind down significant investment in our environmental retrofit program in 2010, we will be ramping up investment in new transmission and in our gridSMART program to modernize our distribution grid and give our customers the ability to actively manage their electricity usage and costs. We also expect to be moving forward with additional new generation construction and retrofit of carbon capture and storage technologies post-2010 to reduce our greenhouse gas emissions and preserve our ability to use domestic coal to generate electricity and keep prices as low as possible,” Morris said.

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