A neighboring state on Monday rejected plans by American Electric Power to build a $2.23 billion clean-coal plant in West Virginia. The company plans to appeal the decision.

Virginia's State Corporation Commission on Monday denied a request from Columbus, Ohio-based AEP to build the Mason County plant.

Virginia's approval is needed because AEP customers in that state would help pay for construction of the plant.

The Virginia commission also rejected an AEP proposal to increase rates to start recovering construction costs from customers.

The commission said the plant's estimated cost, which dates back to November 2006, isn't credible. It also said AEP has no plans to provide a detailed, updated estimate until it gets full regulatory approval.

"This [proposal] represents an extraordinary risk that we cannot allow the ratepayers of Virginia in APCo's service territory to assume," the commission said in a statement. AEP operates as Appalachian Power in Virginia and West Virginia.

AEP spokesman Pat Hemlepp said the company is disappointed, but plans to seek a rehearing. He added that AEP plans to provide more information about the 629-megawatt plant's cost.

Part of the problem with cost is AEP's plan for the Integrated Gasification Combined Cycle plant, which turns coal into a gas, then burns it. AEP argues the process makes it easier to remove carbon dioxide and other pollutants.

"We believe that IGCC is the best way to meet the growing demands for our customers and do it in an environmentally friendly way," Hemlepp said. "We believe over the life of the plant this is a much better value for customers."

West Virginia's Public Service Commission issued a certificate of public convenience and necessity for the proposed plant to Appalachian Power on March 6. The PSC said the plant is needed to help AEP meet demand for electricity.

AEP's proposed financing plan for the plant would charge customers in West Virginia and Virginia a monthly surcharge, which is to be phased in over the four-year construction period. The PSC said the total surcharge would be an estimated $7.70 a month in the fourth year for the average residential customer.

The PSC also required AEP to seek further approval if construction costs exceed $2.23 billion.

AEP has more than 5 million customers in 11 states. Its stock fell 50 cents, or 1.1 percent, to $43.67 Monday.

A neighboring state on Monday rejected plans by American Electric Power to build a $2.23 billion clean-coal plant in West Virginia. The company plans to appeal the decision.

Virginia's State Corporation Commission on Monday denied a request from Columbus, Ohio-based AEP to build the Mason County plant.

Virginia's approval is needed because AEP customers in that state would help pay for construction of the plant.

The Virginia commission also rejected an AEP proposal to increase rates to start recovering construction costs from customers.

The commission said the plant's estimated cost, which dates back to November 2006, isn't credible. It also said AEP has no plans to provide a detailed, updated estimate until it gets full regulatory approval.

"This [proposal] represents an extraordinary risk that we cannot allow the ratepayers of Virginia in APCo's service territory to assume," the commission said in a statement. AEP operates as Appalachian Power in Virginia and West Virginia.

AEP spokesman Pat Hemlepp said the company is disappointed, but plans to seek a rehearing. He added that AEP plans to provide more information about the 629-megawatt plant's cost.

Part of the problem with cost is AEP's plan for the Integrated Gasification Combined Cycle plant, which turns coal into a gas, then burns it. AEP argues the process makes it easier to remove carbon dioxide and other pollutants.

"We believe that IGCC is the best way to meet the growing demands for our customers and do it in an environmentally friendly way," Hemlepp said. "We believe over the life of the plant this is a much better value for customers."

West Virginia's Public Service Commission issued a certificate of public convenience and necessity for the proposed plant to Appalachian Power on March 6. The PSC said the plant is needed to help AEP meet demand for electricity.

AEP's proposed financing plan for the plant would charge customers in West Virginia and Virginia a monthly surcharge, which is to be phased in over the four-year construction period. The PSC said the total surcharge would be an estimated $7.70 a month in the fourth year for the average residential customer.

The PSC also required AEP to seek further approval if construction costs exceed $2.23 billion.

AEP has more than 5 million customers in 11 states. Its stock fell 50 cents, or 1.1 percent, to $43.67 Monday.