Legal & Regulatory

Kentucky Coal Plant’s Future in Doubt

An electric cooperative that provides wholesale power and services to customers in 22 counties in western Kentucky has told state regulators it intends to end an operating agreement at a 312-MW coal-fired plant in Henderson, which could lead to the plant’s retirement.

Big Rivers Electric on May 1 told the state Public Service Commission (PSC) and Henderson Municipal Power & Light (HMP&L), which owns the Station Two plant, that it wants PSC approval to end its contract with the facility. Big Rivers has operated Station Two since the plant came online in 1972. A spokeswoman for Big Rivers told S&P Global Platts that the facility has “experienced losses for several years” and can no longer be operated “in an economic manner.”

HMP&L’s options for the plant include retirement, perhaps as early as 2019. The agency also could look for another operator or begin buying wholesale power from the market. HMP&L at present reserves 115 MW of the plant’s generation; Big River sells the rest on the open market. The power purchase agreement was originally reached in 1998. The city of Henderson and Big Rivers have been at odds for years regarding rights to sell the power not used by HMP&L.

The Big Rivers’ spokeswoman said the co-op’s current coal supply deals are expected to expire before the end of May 2019. The company said it will continue to own and operate its other coal-fired plants in Kentucky, four facilities which in total have 1,444 MW of generation capacity.

According to the U.S. Energy Information Administration (EIA), coal-fired generation produced 85% of Kentucky’s electricity in February 2017, but that level had dropped to about 74% in February 2018. About 10% of the state’s generation came from natural gas in 2016, an all-time high for the state and a number continuing to rise as more gas-fired generation is added and more coal plants are retired or converted to gas.

Renewable energy also is making inroads in a state long tied to coal. Duke Energy in late April brought two solar farms—Walton Solar Power Plants 1 and 2, in Kenton County—online to serve customers in northern Kentucky. The two plants have total generation capacity of about 4 MW. Duke in December unveiled the 2.7-MW Crittenden Solar Power Plant in Grant County.

East Kentucky Power Cooperative, a member-owned utility that has operated in the heart of the state’s coal-mining region since 1941, last summer said its coal-fired generation had fallen to about 70% of its resource mix, down from more than 90%. The utility also installed a solar field with more than 32,000 panels on its headquarters property in Winchester, Kentucky, last year.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).

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