For East Kentucky and the $819 million circulating fluidized bed plant, the obstacles had been building for some time. Environmental groups opposed Smith since its inception more than five years ago and had sued the co-op on several occasions to halt the project. In the waning days of the Bush administration, the Rural Utilities Service slapped a moratorium on low-cost federal loans for new power plants. The recession hit in 2008, cutting electricity demand for many utilities, including East Kentucky.

Then, in June 2010, the Kentucky Public Service Commission, citing changes in U.S. power markets, reopened its inquiry into whether Smith was still needed. The commission originally approved the project in 2005.

Since early this year, East Kentucky had been monitoring the economy and analyzing its impact on projected demand for electricity, estimated construction costs, alternative fuel costs and the risks associated with proceeding with Smith, said Mike McNalley, the co-op’s CFO. “Even before the PSC initiated its investigation, EKPC’s board and management were conducting ongoing due diligence necessary to ensure proceeding with the Smith Unit 1 project remained a sound business decision. First and foremost, EKPC’s board and management must protect our cooperative’s long-term financial integrity.”

What may have sealed Smith’s fate were results of a new electricity load forecast completed by the co-op in late fall. It showed the co-op’s projected load to be “down substantially” from a 2008 estimate, according to East Kentucky Spokesperson Nick Comer. “Energy sales are growing at about one-third the rate they were a few years ago. That does not support building new capacity right now.”