As it currently stands, Kentucky Power, a subsidiary of Columbus, Ohio-based American Electric Power Co. (AEP), plans to retire an 800-megawatt coal unit at Big Sandy in 2015 and convert the plant’s other 278-megawatt coal unit to natural gas in 2016. The utility’s application to switch Unit 1 to gas is pending before the Kentucky Public Service Commission. A PSC decision is expected in early 2014.
Kentucky Power once proposed spending more than $900 million to install scrubbers on Big Sandy, located near Louisa in Lawrence County, to reduce sulfur dioxide and mercury emissions to comply with new federal Environmental Protection Agency rules. But opposition to the more than 30% electricity rate increase the project would produce caused the company last year to scrap the pollution control retrofit and, instead, pursue a purchase of half of the 1,560-megawatt Mitchell coal plant on the Ohio River south of Moundsville, W. Va., from Ohio Power Co., an AEP affiliate.
On October 13, 2013, the PSC approved the 50% acquisition of Mitchell by Kentucky Power for about $536 million.
The Mitchell transaction has angered some officials in eastern Kentucky including State Rep. Rocky Adkins, a Democrat and longtime vocal coal supporter, as well as county officials who fear a loss of power plant and mining jobs as well as local tax revenue once the Big Sandy retirement and conversion are completed later this decade. Big Sandy is Kentucky Power’s only baseload power plant in the region.
Now, Conway, also a Democrat, is asking the Franklin County Circuit Court in Frankfort to vacate and set aside the PSC’s Mitchell ruling on multiple legal grounds.
The Mitchell purchase “will place more than half a billion dollars into Kentucky Power’s rate base and will ultimately raise consumers’ electric rates by more than 20%,” Conway said. “It will also transfer energy production to a neighboring state and leave Kentucky consumers paying the bill. That’s just not right.”
In its order, the PSC accepted Kentucky Power’s assertion that the Mitchell acquisition was less costly than retrofitting Big Sandy with environmental controls.
Conway, though, contends the commission’s determination was “unreasonable and unlawful” because it relied on evidence presented by Kentucky Power and AEP that could not be independently verified.
“The analysis used by Kentucky Power and accepted without independent verification by the commission is simply an ‘apples to oranges’ comparison and is not a reliable basis for the commission’s decision,” he said. “The commission should seek additional, independent information, if it is going to raise electric rates for consumers and eliminate Kentucky jobs.”
Conway also claims the commission failed to consider the economic feasibility of Kentucky Power’s plan and neglected the public policy interests of Kentucky, as expressed by the General Assembly. State legislators have held that the use of Kentucky coal and the continuation of jobs and other economic benefits constitute a legitimate government interest.
Allison Gardner Martin, Conway’s press secretary, said her boss would like to see Big Sandy continue to burn coal. “Obviously, having the Big Sandy plant retrofitted is what is best for that region and the state,” she said.
The circuit court is expected to issue a ruling by spring.