Under the October order from PSC, KPC will purchase half interest in the Mitchell Plant, which has emission control devices called scrubbers, and close two coal-fired units at Big Sandy, which don’t have the pollution controls.
The cost of the Mitchell transaction is $536 million and will eventually result in an estimated 14 percent rate increase for the roughly 173,000 KPC customers in 20 Eastern Kentucky counties. The company plans to convert one of the Big Sandy units to a gas-fired unit and close the other and the changes will allow the company to comply with a 2007 federal consent decree to reduce emissions at Big Sandy in Louisa or close the plant by 2015.
The alternative would have been to retrofit the Big Sandy Plant with scrubbers at a cost of $980 million, which would have resulted in rate increases between 26 and 32 percent.
But the change is expected to cost the area 150 direct jobs and Lawrence County $900 million in lost property taxes for county government and local schools. It also will impact the region’s coal economy because the plant burned about 2.5 million tons of coal annually.
The PSC must still approve the company’s plans to convert one of the Big Sandy’s coal-fired units to natural gas. Friday, the company said it expects to file such a request next month.