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KY Power files to withdraw rate case in connection to power plant transfer

By: Tanner Hesterberg, Hillary Thornton Email
By: Tanner Hesterberg, Hillary Thornton Email
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LOUISA, Ky. (WYMT) Officials with Kentucky Power want the state's Public Service Commission to withdraw a base rate case filed by the utility last year.

Kentucky Power officials filed the case in June 2012 to recover costs associated with buying half the Mitchell power plant in West Virginia.

The company still plans to shut down one of the coal-fired units at the Big Sandy plant in Lawrence County in 2015.

"This rate case was filed last June as basically a backup to recover costs associated with the Mitchell transfer in the event that our settlement agreement was not approved," Kentucky Power spokesman Ronn Robinson. "In the end, that settlement agreement was approved, so there's no need for this case to go forward."

Kentucky power officials estimate customers will see a five percent increase in their bills in January 2014, and another increase of eight to nine percent about 18 months later.

For more information, read our previous stories below.
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Update, 11/20/13

The Kentucky Public Service Commission (PSC) has denied a request by Attorney General Jack Conway for a new hearing in the Big Sandy Power Plant case.

Kentucky Power plans to shut down one of the units at the plant in Lawrence County in 2015 and seek approval to convert the other unit to burn natural gas instead of coal.

Conway requested another hearing in the case on grounds that, among other things, the PSC relied on information that was not properly vetted.

Conway told WYMT he would probably appeal the decision in Franklin County Circuit Court.

A cope of the order is attached to this story.
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Update, 11/14/13

The Kentucky Public Service Commission (PSC) is expected to announce on Tuesday whether a new hearing will take place in connection to the Big Sandy Power Plant in Lawrence County.

Kentucky Power plans to shut down one of the units at the plant in 2015 and seek approval to convert the other unit to burn natural gas instead of coal.

The PSC last month approved Kentucky Power's request to buy half the Mitchell plant in Moundsville, West Virginia.

"The issue before the commission in this proceeding was never whether or not Big Sandy should be closed," PSC spokesman Andrew Melnykovych said. "The issue was given that Kentucky Power company made the decision to close Big Sandy, what was the appropriate way to replace that power?"

Attorney General Jack Conway requested a new hearing in the case.

If the PSC does not grant another hearing, the attorney general has the option of appealing in Franklin County Circuit Court, Melnykovych said.
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Update, 11/13/13

Kentucky's Attorney General wants the state's Public Service Commission to take a second look at its approval of a plan to close an Eastern Kentucky power plant.

The PSC in October okayed Kentucky Power's plan to close part of the Big Sandy Power Plant in Lawrence County. But Attorney General Jack Conway argues the decision was based on information that may not be accurate.

Kentucky Power officials plan to shut down a coal-fired unit at the plant in 2015 - a move company officials said will lead to less of a rate increase on customers than upgrading the plant to comply with new federal air standards.

But Conway said the PSC did not have enough independent analysis before making the decision.

In his filing for a new hearing, Conway stated that process by which Kentucky Power officials submitted evidence contained "clear errors of fact and law."

Kentucky Power is owned by American Electric Power (AEP).

"Ultimately this is a decision we believe helps AEP's shareholders and hurts Kentucky ratepayers,' Conway spokesman Daniel Kemp said.

Kentucky Power officials denied that accusation.

"Basically, we don't feel there's any grounds for what they filed, which is what we stated in our response," said Ranie Wohnhas, managing director of regulatory and finance with Kentucky Power. "So we'll just see what the Public Service Commission thinks."

Kentucky Power plans to buy half the Mitchell Plant in Moundsville, W. Va., in order to generate enough electricity once the Big Sandy plant goes offline.

A request by Appalachian Power to buy the other half of the Mitchell plant was denied by the Virginia State Corporation Commission. But Kentucky Power officials said that will not inflate the projected rate hike of 14 percent on customers.

"It makes zero impact," Wohnhas said. "The only difference is, instead of it being between Appalachian (Power) and Kentucky Power on the 50/50, it's between Kentucky Power and AEP Generation Resources on a 50/50 and the costs remain the same."

Costs would be much greater on customers if the Big Sandy was upgraded and stayed open, AEP officials said.

But Conway is not convinced.

"(Attorney) General Conway has intervened to ensure the interests of Kentucky ratepayers are adequately represented in the proceedings and he is fighting to protect them," Kemp said.

Both sides expect the PSC to announce on Tuesday whether a new hearing will take place.

Around 173,000 customers in 20 Eastern Kentucky counties are affected by the decision.

A copy of Conway's request for a new hearing is attached to this story.
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Update, 10/21/13:

Closing part of the Big Sandy power plant in Lawrence County is the right decision, the top official at an Eastern Kentucky utility company said Monday.

Kentucky Power President Greg Pauley said shuttering the coal-fired part of the plant in 2015 will save customers money in the long run.

"I have to look for what's appropriate," Pauley said. "Not only for the operating of the plant, but I have to consider the 173,000 customers that we serve in Eastern Kentucky."

The Public Service Commission earlier this month okayed Kentucky Power's request to idle part of the Big Sandy plant and buy half of the Mitchell plant in Moundsville, West Virginia.

That move will be cheaper than upgrading the Big Sandy plant with scrubbers to comply with new EPA regulations, which would have resulted in a bill hike of 31 percent, Pauley said.

"Obviously it was met with a lot of criticism and a lot of forces working against us," he said. "Because they wanted us to burn coal, but they didn't want to pay the 31 percent."

Kentucky Attorney General Jack Conway and House Majority Floor Leader Rocky Adkins accused Kentucky Power officials of not adequately studying the financial effects of closing part of the plant.

"To be critical of the vetting of those numbers is not accurate because they were," Pauley said. "There were data requests. There is information that has to be there. Everything that is submitted is submitted under sworn testimony. It's a very transparent process."

The closure affects more than 80 workers, many of whom he said have already found new jobs, Pauley said.

Pauley made his comments in an interview on Issues and Answers: The Mountain Edition.
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Update, 10/10/13:

Kentucky Attorney General Jack Conway is at odds with one utility company over a decision to close part of a power plant in Eastern Kentucky.

The Kentucky Public Service Commission earlier this week approved a plan by Kentucky Power to close part of the Big Sandy plant in Lawrence County in 2015.

"The attorney general opposes this plan for a couple of reasons," Conway spokesman Daniel Kemp said. "First, Kentucky Power did not thoroughly evaluate other options available to it, such as purchasing the power on the market from other electric utilities.

"Additionally the company did not conduct an economic feasibility study as the law."

Conway is mulling his legal options, Kemp said.
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Update, 10/9/13

The closure of the Big Sandy power plant could have a devastating impact on students and teachers in the area, the top school official in Lawrence County said Wednesday.

The Kentucky Public Service Commission earlier this week approved a plan by Kentucky Power to close part of the Big Sandy Plant near Louisa in 2015.

That topic worries Superintendent Mike Armstrong and many teachers and students in the Lawrence County school system.

A shutdown means the school system could lose more than $470,000 per year in property tax revenue from the plant.

"It equates to about 14 general fund experienced teacher positions," Armstrong said. "It likewise equates to almost 46 teacher aide positions out of the general fund."

But the hit to the school system goes beyond finances, he said.

"You lose the average daily attendance that student generates," Armstrong said. "You lose the presence of that student's shining face in the classroom. You lose the presence of that mom and dad who support the school in other ways."

Kentucky Power officials have said they may convert part of the Big Sandy plant to burn natural gas instead of coal once the coal-fired unit is idled in 2015.
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Update, 10/8/13

Kentucky Power customers could soon be paying more on their bills.

The Kentucky Public Service Commission Monday approved a request by Kentucky Power to buy a 50-percent share of a plant in West Virginia and shutter part of the Big Sandy plant in Lawrence County, Ky.

The company wants to close one of the units at the Big Sandy plant near Louisa in 2015 instead of upgrading the facility to comply with stricter air regulations from the Environmental Protection Agency.

"The evidence in this case clearly indicated that the least-cost option for the company to pursue over the long term was to purchase the 50 percent share in Mitchell, to replace Big Sandy," PSC spokesman Andrew Melnykovych said.

Kentucky Power will buy half of the Mitchell plant near Moundsville, W.Va.

Kentucky House Majority Floor Leader Rocky Adkins, who represents Lawrence County, opposes the decision.

"The people of Eastern Kentucky built the Big Sandy power plant," Adkins said. "And they payed for it through the rates that they've paid. So this is a disappointing and devastating decision and it's one I'm going to work hard to try to overturn."

Rates will spike about 14 percent, and customers could see bigger bills in the next two months, PSC officials said.

"I disagree with the decision because I think they relied too much on Kentucky Power (and American Electric Power's) information," Adkins said. "Rather than doing the research they needed to do themselves to get independent information and do the correct calculations that needed to be done that really show the true cost."

The plant's closure will result in a multi-million dollar hit to the local economy, Adkins said.

But that scenario has already been accounted for, Melnykovych said.

"The commission was aware of those economic impacts and reflected that in its order," he said. "(The PSC) directed Kentucky Power to more than double the amount of money it was going to provide to Lawrence County and the neighboring counties for economic development activities and things like job retraining."

Around 173,000 customers in 20 Eastern Kentucky counties are affected by the decision.

The Big Sandy plant is scheduled to stop burning coal in 2015. But Kentucky Power officials have said they will alter some of their equipment at the plant to burn natural gas instead of coal.

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Story from August 23, 2013:

Faithful coal supporters were out pledging their support for the Big Sandy Power Plant in Lawrence County. The plant is facing a proposed shut down after officials with Kentucky Power say due to federal and EPA regulations they must retire at least one unit and stop burning coal in the other by 2015.

'Coal keeps the lights on' is a common phrase heard in Eastern Kentucky, but it is much more than a phrase to folks at the rally.

Elizabeth Slone explains, "The people who built this plant and brought this plant here, their jobs are going to have to be relocated. Then you have the coal miners who truck this coal every day, so their jobs are going to be lost."

Coal jobs that bring more than two million tons of coal to the plant each year.

State Representative Rocky Adkins says, "This country and Kentucky were built on low cost energy. Many people don't know it but about 92% of our energy in the state is produced by coal, and we have the 4th most low cost energy in the nation."

Officials issued the proposed shut down after stating that required upgrades would mean around a 30 percent rate increase for customers, but many folks say they believe it is going to cost more to close Big Sandy and transfer the power to another plant in West Virginia.

Representative Adkins says, "Our people need it and deserve it, to abandon and wave the white flag at a power plant in the heart of coal country, in my opinion is a tragedy."

Supporters say if the plant closes, the impact could be felt throughout the area.

"The impact the Big Sandy Power Plant has on the local economy just here in Lawrence County is about a half a million dollars a year to the school district, about another half million to the local government," says Adkins.

Folks at the rally say they are pledging their support for both coal and the power plant because of the long term effects they believe it will have on their hometown and also on hometowns throughout the country.

Julie Wilson, attended the rally on behalf of 'Friends of Coal' and says, "Everything tangible is produced by a source of energy, and if 50% and over of America depends on coal and then you take that away...where are we?"

"We are worried about the long term impact, we are trying to save our hometown...we are trying to save everyone's hometown," says Slone.

That is why they are standing up and supporting what they say keeps their lights on.

Officials with Kentucky Power could not be reached for comment about today's rally.

The Sierra Club Beyond Coal Campaign issued this statement:

"Retiring Big Sandy Power Plant and investing in clean energy will help move Eastern Kentucky families forward by cleaning up our air and water, as well as creating new industry with true staying power. We also believe it remains critical to support economic transition investments as coal-related jobs disappear. Together we must work toward homegrown economic development and a clean energy future to protect our families.”


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