West Virginia customers of Appalachian Power and Wheeling Power (American Electric Power’s subsidiaries in the state) will pay tens of millions of dollars more in electric rates because of economic losses at the companies’ coal-fired power plants.
The coal plants in question are John Amos, Mitchell and Mountaineer. The three-unit Amos plant has 2,900 megawatts (MW) of net summer capacity; the two-unit Mitchell plant has 1,560MW of capacity; and the single-unit Mountaineer plant has 1,299MW of capacity. The age range of the six units ranges from 45 to 54 years.
Why did these utilities run their coal plants at a loss? To burn coal. This is the second consecutive year that AEP has found itself in the situation of having contracted for significantly more coal than needed to operate the plants economically. To avoid exceeding the physical limits for its coal stockpiles at the plants, the utility ran them even at times when it did not make economic sense.
Between March 2024 and February 2025, the three coal plants incurred $66 million in losses from the difference between the revenue earned from selling electricity into the regional market and the cost of operating the units. As IEEFA testified to the West Virginia Public Service Commission, West Virginia electricity customers will pick up the tab for $36 million (the utility also has customers in other states).
In part, this reflects the ongoing poor economics of coal plants. Natural gas plants continue to out-compete coal on an economic basis. During the year from March 2024 to February 2025, the coal plants’ costs averaged more than market prices for all months except January and February, when cold winter temperatures (including a polar vortex) drove up energy market prices.
The losses also reflect poor foresight on the part of AEP, given that the declining economics of coal generation is a longstanding trend. Utilization of coal units in PJM (the regional electricity market covering D.C. and parts of 13 states, including all of West Virginia) has been on a downward trajectory since 2014, as shown in the following graph. Yet this is the second year in a row that Appalachian Power and Wheeling Power have found themselves in the position of having bought too much coal. Between March 2023 and February 2025, the losses at the coal units totaled more than $150 million.
As IEEFA reported in December 2024, excessive coal inventories are an industry-wide phenomenon, a result of the declining economics of coal and increasing competition from gas and renewable energy sources. Excess coal inventories are posing a challenge not only for utilities, but also for coal producers trying to sell into an oversupplied market.