AEP's plan to build the largest wind farm in the United States might have been dealt a fatal blow.
The Public Utility Commission of Texas voted Thursday to reject the proposed 2,000-megawatt Wind Catcher wind farm, stating that as it is structured now, the project doesn't offer clear enough benefits for rate payers.
"We’re extremely disappointed in today’s ... decision rejecting our Wind Catcher proposal," Melissa McHenry, an AEP spokeswoman, said in an emailed response. "We are evaluating our options."
The commission's three members said AEP has more work to do before the $4.5 billion project can go forward.
"Without significant ... safeguards for the ratepayers, I'm not there," DeAnn Walker, chairman of the Public Utility Commission of Texas, said at the hearing in Austin. "I don't believe it provides sufficient safeguards for the ratepayers. The costs are known but ... the benefits are based on a lot of assumptions that are questionable."
Texas' approval is one of four AEP needs to build the 800-turbine farm on the Oklahoma panhandle. Once completed in 2020, AEP's Southwestern Electric Power Co. would own 70 percent of the project.
AEP has argued the investment would save customers $4 billion over the 25-year life of the farm.
Wind Catcher has been approved by Louisiana and Arkansas, but still needs approval by Texas and Oklahoma to move ahead. The company is running out of time on the project and already has started some early construction, AEP leaders said in an earnings call Wednesday.
"From the very beginning, (we) have worked extensively to evaluate the risks of the project to our shareholders and our customers to deliver the important benefits of lower customer bills, valuable hedges on future energy process, and diversity of supply, while achieving substantial economic benefits to the states involved with this project," CEO Nicholas Akins said in the earnings call.
"AEP believes, through multiple negotiations and commission feedback received in these states, we have struck a balance between our shareholders, our customer and the state interest impacted by this important project," he continued.
But he emphasized to investors that the company expects 5 to 7 percent growth regardless of the Wind Catcher project.
AEP stock reacted with a bump this afternoon, rising about 2.2 percent on the day to $70.95 a share.