Local/Regional News
8:31 pm
Wed May 30, 2012

Utility Pulls Plug On Costly Kentucky Plant Upgrade

LOUISVILLE, Ky. -- An electric utility is withdrawing its bid to spend nearly $1 billion on environmental upgrades to continue burning coal at an aging eastern Kentucky power plant.

Kentucky Power Co. filed a motion with the state's Public Service Commission Wednesday to withdraw a $940 million plan for upgrades at its 800-megawatt Big Sandy No. 2 plant near Louisa. It had planned to build a scrubber system by 2016 in order to meet federal environmental guidelines. The system removes sulfur dioxide and other pollutants from plant emissions.

The utility told ratepayers that the scrubber upgrade, which had to be approved by the PSC, would have increased the average electric bill by about $31 a month.

"We feel it's in the best interest of all involved, including our customers ... to reevaluate all options as it relates to meeting our environmental obligations and also the cost for customers," Kentucky Power communications manager Ronn Robinson said Wednesday. Robinson said the No. 2 unit at Big Sandy can operate without upgrades through 2015.

He said the options could still include installing a scrubber, buying power on the open market or building or retrofitting a facility powered by natural gas.

After the utility applied to install the scrubber in December, environmental groups, including Earth Justice and the Sierra Club, argued that there were cheaper alternatives to installing expensive coal pollution controls, including burning natural gas.

The groups said Wednesday that the best option would be to close the Big Sandy plant, which was built in the early 1960s.

"Burdening Kentuckians with a billion-dollar retrofit of an outdated coal plant would be a bad decision, and we are glad that (the utility) has realized that," Wallace McMullen, a Sierra Club member from Kentucky, said in a statement Wednesday.

When Kentucky Power, a subsidiary of American Electric Power, announced plans for the scrubber last year, President Greg Pauley said it was the "least cost option" and a way to "retain local jobs."

But Robinson said Wednesday that the utility had since learned that there should be more electric capacity available on the market in 2015 and 2016 than it originally expected. He added that in the six months since the application for the scrubber was sent to the Public Service Commission, natural gas prices have flattened.

Kentucky Power has 173,000 customers in 20 eastern Kentucky counties.