American Electric Power drops plan to save Ky. coal plant with $1 billion retrofit, 30% rate hike

Big Sandy Plant (Shawn Poynter photo)

UPDATE, May 31: Kentucky Power Co., a subsidiary of AEP, dropped its plan for the retrofit of the plant and the rate increase, saying it "expects excess electricity to be readily available for purchase from other sources by the time it would have to comply with the new EPA standards," Scott Sloan reports for the Lexington Herald-Leader. The announcement "is another blow to coal in a state that's one of the nation's leading producers," Sloan writes.

Read more here: http://www.kentucky.com/2012/05/30/2206351/kentucky-power-abandons-plan-to.html#storylink=cpy

Read more here: http://www.kentucky.com/2012/05/30/2206351/kentucky-power-abandons-plan-to.html#storylink=cpy

Eastern Kentucky is bracing to see how the state utility commission votes within the next week on a costly proposal to retrofit a power plant to allow it to continue to burn coal instead of cheaper, cleaner natural gas. This is a tough sell in coal country but one that is not as clear-cut as it used to be. Eric Lipton writes in the New York Times that there are, of course, those who believe that to give over the Big Sandy power plant in Louisa to natural gas is tantamount to surrender to the environmentalists. But the truth is more complicated. The surge in natural-gas production in the U.S. through the process of hydraulic fracturing has made gas a cheaper and less polluting alternative to coal, and new anti-pollution rules will make coal plants more costly. Lipton notes that "more than 100 of the 500 of the coal-burning power plants in the United States are expected to be shut down in the next few years."
 
The Big Sandy's $1 billion retrofit by plant operator American Electric Power to "save coal" will also mean a 30 percent rate hike to its customers. This is something many locals wonder if they can manage when their bill comes. Estimates are that an average AEP residential customer would pay an additional $472 a year to pay for the retrofit. Lipton writes: "Channeling the animosity toward Washington and fears of their livelihoods, coal producers union leaders, landowners and railroads . . . have leaned on county judges, state legislators and other politicians to attempt to silence public criticism of the 30 percent electrical rate increase and to pressure the Kentucky Public Service Commission to approve the retrofit project."

UPDATE: Sloan notes that the state attorney general's office "took aim at the idea that keeping a coal plant in Eastern Kentucky helps the region's economy," noting that "only 30 percent of the coal burned at Big Sandy comes from Eastern Kentucky," and a retrofitted plant would "likely expand the types of coal that it uses . . . using less low-sulfur Eastern Kentucky coal, and replacing it with more higher-sulfur varieties such as Illinois Basin coal."

Read more here: http://www.kentucky.com/2012/05/30/2206351/kentucky-power-abandons-plan-to.html#storylink=cpy