TheTimesTribune.com, Corbin, KY

State News

March 26, 2014

House passes bill aimed at saving Big Sandy Plant

CORBIN — By Ronnie Ellis / CNHI News Service

Backers of a bill to require the Kentucky Public Service Commission to “reconsider” its previous order approving Kentucky Power’s purchase of a West Virginia generator say all they are asking “is for them to take a second look and look at all the facts.”

House Bill 535, sponsored by Majority Floor Leader Rocky Adkins, D-Sandy Hook, would require the PSC to reconsider any multi-state transaction if another state’s utility regulators don’t approve the transaction. That describes the KPC transaction in which it purchased half the generating power of a Moundsville, W.Va., generator.

The purchase allows KPC to replace the power generated at one of KPC’s two coal fired units at its Louisa Big Sandy Plant. The other unit eventually is to be converted to natural gas.

Doing so will eliminate Big Sandy’s annual purchase of 2.5 million tons of coal during an already depressed coal economy in eastern Kentucky. Adkins and Rep. Keith Hall, D-Phelps, who spoke in favor of the bill Tuesday, are strong supporters of the coal industry.

The move is a major blow to the Lawrence County economy and will cost the local government and school system there almost $900,000 in annual property taxes.

The transaction allows KPC to comply with a 2007 consent order with the federal government to reduce emissions or close the plant by 2015. The transaction will result in a 14 percent rate increase for KPC’s 175,000 customers in 20 eastern Kentucky counties. Rate-payers will also have to pay a 5 percent surcharge to pay for the acquisition of the Mitchell Power Plant in West Virginia.

Adkins and Hall want KPC to install pollution controls called scrubbers which would allow the plant to continue burning coal but the company says that will increase rates by 30 percent of more.

KPC and Ohio Power, which owns the Mitchell Plant, are both subsidiaries of Ohio based American Electric Power. AEP originally intended to sell the other half of the Mitchell Plant’s generating capacity to another subsidiary company serving West Virginia and southern Virginia but regulatory agencies in those states did not approve the transfer.

That’s Adkins’ argument: the Kentucky PSC should reconsider its own ruling in light of the other commissions’ rulings.

Hall argued Tuesday that KPC made $40 million in profits last year and rates are already too high.

“Why is it I pay $250 a month to heat my home in Frankfort, while my mama pays $600 to heat her home of the same size?” Hall asked.

But Rep. Brian Linder, R-Dry Ridge, who works for Owen Electric Cooperative, said installing scrubbers would minimally raise rates by 30 percent. Linder said the problem lies not with KPC but with the anti-coal regulations from Washington.

Rep. Jim Gooch, D-Providence, also argued Kentucky is being unfairly treated by Washington and the administration of Barack Obama because of its reliance on coal and the consequent low energy costs.  (The consent order was signed by KPC in 2007, the year before Obama was elected to his first term.)

Rep. Kevin Sinnette, D-Ashland, said Adkins’ bill “puts pressure on Kentucky Power to tell the truth” about the transaction and its customer rates.

Other than Linder, no one spoke against the bill and it passed 62-34. It will now go to the Senate for action.

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.

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