The fact that we have been anticipating — no, make that fearing or dreading — for months that the Kentucky Public Service Commission would approve Kentucky Power Co.’s purchase of half interest in a West Virginia power plant does not make it any easier to take. The decision clears the way for the eminent demise of much of the Big Sandy Power plant near Louisa.
For the life of us, we still can’t see much that is positive in this decision for the people in the 20 eastern Kentucky counties served by Kentucky Power.
Oh, to be sure, Kentucky Power customers will see their rates go up by “only” 14 percent by purchasing half interest in the Mitchell Power Plant just south of Moundsville, W.Va., as opposed to the 26 percent rate hike that would have been required to add scrubbers to the Big Sandy plant to bring it into compliance with federal Environmental Protection Agency air quality standards.
As far as Kentucky Power officials are concerned, the 12 percent difference between the rates needed to buy half of the Mitchell plant and bring the Big Sandy plant into compliance clearly make purchasing the Mitchell plant the best option as far as area consumers are concerned. And if you only consider the impact the PSC’s decision will have on what area customers pay for electricity, the PSC made the right decision.
But this decision is not just about what we pay for electricity. It is about the loss of approximately 150 of the highest paying and most reliable industrial jobs in Lawrence County because of the downsizing of the power plant. It means the coal industry in this region, which already has seen the loss of hundreds of high-paying mining jobs disappear, will see more jobs eliminated as one of the region’s the biggest coal customers ceases to need coal. It means that dozens of truckers who for years have made a good living transporting coal from the mines to the power plant will see their jobs disappear.
It means the loss of approximately $1 million a year in tax revenue for both Lawrence County government and the Lawrence County School System. At the very least that means the elimination of dozens of jobs for teachers and other school employees and for county employees. Even worse, it means that the school system will lack the funds to adequately educate children and county government won’t be able to afford to provide essential county services
No wonder State Rep. Rocky Adkins, who as majority leader is one of the most powerful members of the Kentucky House of Representatives, called the PSC’s decision “disappointing and devastating,”
While PSC officials insisted that considering the “arguments on economic benefits to specific areas of Kentucky Power’s service territory are beyond the scope of the commission’s jurisdiction,” the commission directed Kentucky Power to “more than double the amount of shareholder money it had voluntarily agreed to spend on economic development” in the area to offset those job losses and reductions in coal use by the Big Sandy plant.
The commission will require Kentucky Power to spend at least $233,000 in each of the next five years on economic development with $33,000 going to training programs through the Kentucky Community and Technical College System focused on weatherization and energy efficiency.
We’re all for spending more on economic development but we question how training people on weatherization and energy efficiencies is going to create many of the type of jobs this region will need to replace the number of good-paying industrial and mining jobs and high-paying mining jobs that will be lost by the closing of the Big Sandy plant. What we fear is that the Kentucky Power money will be used to train area residents for jobs that will force them to move to find work. Out-migration already has cost this region too many of its best and brightest young people. The PSC’s decision will only make the problem worse.
How is closing the only large generating plant in eastern Kentucky going to enhance economic development in this region? It seems that would-be employers that require a lot of electricity won’t give this region a second look.
All area elected officials were united in protesting the PSC’s decision,
Daniel Kemp, a spokesman for Attorney General Jack Conway, expressed disappointment, saying the attorney general is “exploring our legal options regarding the ruling.”
“Kentucky Power did not thoroughly evaluate other options available to it, such as purchasing the power on the market from other electric utilities,” said Kemp. “Additionally, the company did not conduct an economic feasibility study, as the law requires, to determine whether its ratepayers could afford the increased rates that will result from this plan.”
The PSC’s decision really dates back to 2007 when Kentucky Power agreed under a federal court consent decree to close an 800-MW coal-fired unit at the Big Sandy facility by mid-2015 unless it was upgraded to meet stricter carbon emissions standards. Even if KPC changed its mind and agreed to upgrade the Big Sandy plant, it’s unlikely the necessary changes could be made by 2015.
The decision also incorporates an earlier agreement by KPC and two intervening groups, the Kentucky Industrial Utility Customers, Inc., and the Sierra Club, to freeze rates until May 31, 2015. It removed a provision, however, permitting KPC to pass onto ratepayers $28 million in costs to study whether to upgrade Big Sandy.
Adkins said he will ask the PSC to reconsider its decision.
“I don’t think there was a fair calculation of what is the lowest cost option,” Adkins said. “I’m thoroughly convinced putting scrubbers on at Big Sandy is the low-cost option in the short run and the low-cost option over the next 30 years.”
What supporters of the Big Sandy plant now need more than ever are facts to support the opinions of Adkins and others. If they can’t be supplied, then we fear the PSC’s decision will stand.