The Richmond Register

Local News

December 18, 2013

Scrubbers at Big Sandy plant might not help eastern Kentucky coal

FRANKFORT — Lawrence County officials and supporters of eastern Kentucky coal are reeling from the Public Service Commission’s approval of an agreement allowing Kentucky Power Company to idle its coal-fired generating units at its Big Sandy facility in Louisa.

They hope an appeal of the agreement by Attorney General Jack Conway might somehow result in the installation of scrubbers at Big Sandy that would allow the facility to continue burning about 2.5 million tons of eastern Kentucky coal each year.

But even if Conway’s appeal succeeds and KPC is persuaded to install scrubbers at Big Sandy, it’s no guarantee the facility would continue burning the low-sulfur, but more expensive, coal from eastern Kentucky.

The PSC approved KPC’s request to purchase half-interest in the Mitchell coal-fired plant in Moundsville, W.Va., currently owned by a sister company and which already has scrubbers. KPC would idle one of its two coal-fired units at Big Sandy and eventually convert the other to natural gas.

The agreement is opposed by Lawrence County officials and state Rep. Rock Adkins, D-Catlettsburg, who say it will cost the county $900,000 in lost tax revenues, at least 150 direct jobs and devastate the local and regional coal-dependent economy.

Conway has gone to Franklin Circuit Court, trying to reverse the PSC decision, saying it’s flawed because KPC relied on an internal analysis by its parent company, American Electric Power, to determine the Mitchell transfer is the least-cost option to meet emission standards imposed by a 2007 federal consent decree.

Originally, KPC proposed installing scrubbers at Big Sandy at a cost of $900 million, which might have raised rates by 30 percent or more. Conway opposed that request. In a May 2011 briefing, Conway’s office argued that the plan would produce “major rate increases” and might induce “major industrial customers to leave KPCo’s territory.”

Conway’s spokeswoman, Allison Martin Gardner, said the brief was based on Conway’s belief the company should have sought an independent analysis of the costs rather than relying on the AEP study.

KPC later withdrew the request in favor of the $536 million Mitchell transfer, which is expected ultimately to raise rates by as much as 19 percent (including a 5 percent surcharge to recover part of the transfer costs.)

When he filed the appeal, Conway criticized the transfer plan, contending the company should have looked at “retrofitting the Big Sandy facility in Louisa, Kentucky.”

Martin said the call for retrofitting isn’t a reversal of Conway’s original position.

“We’ve seen some studies of installing scrubbers at other utilities which were more in the $400 million range,” she said.

Adkins also thinks it may be possible to install scrubbers at Big Sandy for far less than the $900 million price tag. He said that would narrow the difference between the 30 percent rate increase estimates of the original proposal and the 20 percent range of the Mitchell transfer plan.

KPC spokesman Ronn Robinson said the numbers don’t back up Conway’s and Adkins’ arguments.

“I would disagree with those numbers,” Robinson said. “That was proved in the case we presented before the commission. The commission found unequivocally (the Mitchell transfer) was in the best interest of our rate payers.”

Even if scrubbers were cost effective, it might mean KPC would simply choose to burn lower-priced, high-sulfur coal from western Kentucky or Illinois.

“Scrubbers give you the ability to use a greater, more diverse mix of coal because the scrubber is going to remove the contaminants of the high-sulfur coal,” Robinson said. “We would probably look at a mix, but you would burn the cheapest coal to benefit your customers.”

The PSC allows utilities to include in their rates a cost of fuel adjustment, but only if the utility uses the cheapest fuel available for its particular generators.

“That’s what the commission would want you to do, to burn the cheapest coal,” Robinson said.

Adkins said the transportation costs would outweigh any difference in price between eastern Kentucky and high-sulfur coal from the west and said there are also high-sulfur coal reserves in eastern Kentucky.

Bill Bissett, president of the Kentucky Coal Association, said transportation costs might be significant for Big Sandy because it is located next to a river full of coal barges. “You literally have coal across the street.”

But he also pointed out that KPC’s parent company, AEP, is the largest coal user in the nation and would likely base its purchasing decisions on a national market rather than the regional picture.

It won’t matter unless Conway wins his appeal. Robinson would not comment on the pending litigation but said KPC expects to complete the Mitchell transfer by Dec. 31.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

 

1
Text Only
Local News
  • 8-2 Quilt Extravaganza 1.jpg Quilting stitches history, friendships together

    Within the first two hours of the 10th annual Quilt Extravaganza at Berea Community School, more than 200 people had already signed the guestbook.

    Colorful displays of quilt collections lined the school’s gymnasium.

    August 1, 2014 6 Photos

  • 8-2 EKU gift.jpg Dizney gift lets EKU begin $15M stadium addition

    Eastern Kentucky University athletics has received its largest-ever single gift.

    President Michael Benson announced Friday that Donald R. and Irene Dizney, of Ocala, Fla., have committed a lead cash gift toward a $15 million multi-purpose facility to replace the grandstands on the east side of Roy Kidd Stadium.

    August 1, 2014 1 Photo

  • 8-1 St. Mark door.jpg Arabic letter N painted on church door

    Throughout its history the Roman Catholic Church has been associated with Latin language and lettering, so passersby on West Main Street were surprised Thursday to see a strange symbol emblazoned on the church’s door.
    Some were even more surprised to learn it was an Arabic character.

    August 1, 2014 1 Photo

  • Fire damages Southern Hills building

    A building in the Southern Hills shopping center at the corner of Commercial Drive and Gibson Bay Drive was damaged by a Thursday afternoon fire.
    Contractors had been working to update the vacant building but were probably not the cause of the fire that began in the bathroom, Richmond Fire Chief Buzzy Campbell said after the fire was extinguished.

    August 1, 2014

  • 8-1 demo derby 1.jpg Demolition derby at the county fair

    The emcee, firefighters and paramedics race to help the driver of an over-turned car in Wednesday night’s Madison County Fair demolition derby. The driver was unhurt and the vehicle was quickly righted.

    August 1, 2014 3 Photos

  • 8-1 fair pageants 3.jpg Royalty crowned at Madison County Fair

      

    August 1, 2014 3 Photos

  • 8-1 Bees 2.jpg Bee-ing in the know

    Bee lovers were buzzing around Eastern Kentucky University this week for the Eastern Apicultural Society’s 2014 conference.
    Hobbyists, scientists and apiarists traveled from as far as Canada, France and New Zealand, as well as many states, to spend the week exploring numerous aspects of bees.

    July 31, 2014 8 Photos

  • 8-1 Tanya R. Horn.jpg Store employee charged with taking $10,000

    Tanya R. Horn, 33, of Darlene Court, pilfered $10,196 in cash from Posh Tots on Meridian Way over the course of two years, according to a Richmond Police report.

    July 31, 2014 1 Photo

  • 7-30 Candids 1.jpg Madison County Fair paid admissions total 10,000 by Tuesday

    Approximately 10,000 people had purchased tickets to the Madison County Fair by Tuesday evening, Billy Tudor, fair board president said Wednesday morning.
    The count does not include Sunday’s Family Fun Day, which offered free admission, Tudor said.

    July 31, 2014 10 Photos

  • 7-31 Pageant Toddler Girl Winners.jpg Babies, toddlers crowned at Madison County Fair

      

    July 31, 2014 4 Photos