Daily Independent (Ashland, KY)

Editorials

March 23, 2014

Fighting for jobs

Adkins bill may not save plant, but it is worth a try

ASHLAND — Even if it is approved by the 2014 Kentucky General Assembly, there is a good chance House Bill 573 will not prevent Kentucky Power Co. from permanently shutting down one unit of its Big Sandy Power Plant near Louisa.  But who can blame House Majority Leader Rocky Adkins, D-Sandy Hook, for filing the bill as a last-ditch effort to save a power plant  so critical to the economy, not only of Louisa and Lawrence County but the entire region. 

Not only will the closing of the plant eliminate some of the best paying and most stable jobs in Lawrence County, but it also will be another huge blow to this region’s coal industry, which already has seen the closing of many mines and the elimination of hundreds of high-paying mining jobs. Also scheduled for elimination are the jobs of dozens of coal-truck drivers who transport coal from the mines to the plant.

Originally, Kentucky Power planned to bring the Big Sandy plant into compliance with federal clean air standards by installing scrubbers at the plant at an estimated cost of $980 million. But when Kentucky Power requested a 31 percent rate increase to pay for that project, consumers and politicians like Attorney General Jack Conway loudly protested. Conway threatened legal action to prevent the rate hike.

That’s when Kentucky Power announced its proverbial “Plan B,” which was to acquire half interest in the Mitchell Power Plant at Moundsville, W.Va.,  owned by Ohio Power, which like Kentucky Power is a subsidiary of American Electric Power (AEP), while closing the Big Sandy operation at an estimated cost of $536 million. The Moundsville facility has scrubbers. Eventually, the other coal-fired unit at Big Sandy  would be converted to natural gas.

While not nearly as much as the 31 percent rate increase Kentucky Power requested to put scrubbers on its Big Sandy plant, Kentucky Power already has been granted a 14 percent rate increase by the Public Service  Commission plus a 5 percent surcharge on rates to pay for its interest in the Mitchell plant.

Attorney General Jack Conway — who opposed the original scrubbers plan — also opposed the final agreement, arguing KPC didn’t get an independent analysis of the relative cost options. His office has challenged the PSC order in Franklin Circuit Court.

Ohio Power also planned to transfer the other half of the Mitchell Plant’s generating capacity to another AEP subsidiary that serves West Virginia and Virginia and those states’ utility regulators turned down that request.

That rejection is the basis HB 573, which would require the PSC to re-evaluate such “multi-state” transactions and orders if a utility regulating commission in one of the other affected states didn’t approve the request.

Kentucky Power President Greg Pauley told the House Committee on Tourism and Development and Energy the HB 573 won’t accomplish what Adkins seeks to do because Kentucky Power’s purchase of half of Mitchell is not contingent upon sale of the other half to Appalachian Power.

“This bill does not get me and this bill does not get the Mitchell Power Plant,” Pauley said. “This bill opens up unintended future consequences.”

Such a deal would make it difficult or impossible for power companies to assure customers of a reliable rate for a determined period of time, Pauley said, because the rate approved by PSC could always be reversed.

Pauley also questioned Adkins’ account of the Mitchell transaction and Kentucky Power’s commitment to keep the Big Sandy Plant operating on coal. That didn’t sit well with committee members, most of whom support coal and live in eastern Kentucky.

The largely pro-coal membership of the committee voted to send the measure to the House Floor. House Speaker Greg Stumbo, D-Prestonsburg, said he supports the bill, and he has the power to bring the bill up for a vote by the full House. If it is approved by the House, which seems likely, it would go to the Senate, where its chances are less certain because that body is much more pro-business.

But even if the bill becomes law, there is no guarantee it will save the Big Sandy Power Plant. In fact, we suspect the closing of the plant is a “done deal” and there is little even an influential legislator like Rocky Adkins can do to prevent it. Nevertheless, we commend Adkins for doing everything he can to save a power plant that is so critical to the economy of this region. We only wish we were more confident Adkins can do anything to prevent the closing.

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