While not saying the project is dead, the Kentucky Power unit of American Electric Power (NYSE: AEP) on May 30 filed a request with the Kentucky Public Service Commission to let it shelve its application for approval to build a dry flue gas desulfurization (DFGD) scrubber on the 800-MW Unit 2 of the coal-fired Big Sandy power plant.
Kentucky Power asked for withdrawal of the application “without prejudice,” implying that it could be filed again. “The basis for the request is that the Company wishes to re-evaluate alternatives to meet the Company’s obligations under the Consent Decree, the Cross-State Air Pollution Rule, the Mercury and Air Toxic Standards, and other environmental standards,” the utility said. “The Company will file a new application, as required by Kentucky law, when the reanalysis is complete and a decision on the alternative is made.”
The Sierra Club, which had been arguing in the Big Sandy scrubber case for cleaner power alternatives, immediately hailed the Kentucky Power withdrawal as a victory. “Until today, American Electric Power was planning to sink over a billion dollars into new scrubbers on the plant,” the club said in a May 30 statement. “However, AEP faced strong criticism from the local community over a 30% increase in rates that would be required to finance the upgrades.”
Besides the Sierra Club and other environmental groups, an opponent of the project had been the Kentucky Attorney General, who said the project would mean too big a rate increase with too little benefit to the eastern Kentucky economy. During a recent hearing, a Kentucky Power witness, upon cross-examination by the Attorney General, confirmed that the company had not conducted any studies indicating whether the proposed DFGD was in fact economically feasible for the company’s certified service territory, said the AG in May 11 testimony filed at the Kentucky Public Service Commission.
“This admission by the company is in and of itself tantamount to a prima facie finding by the Commission that the company has failed to carry its burden in demonstrating the economic feasibility of the proposed application,” said the AG’s brief. The notion of affixing a brand new high-tech DFGD facility onto the 43-year old Big Sandy Unit 2 (together with the assumption that Big Sandy 2 would continue in operation until 2040) hardly seems reasonable, which calls into question the “necessity” for the project, the AG wrote.
Kentucky Power has said the DFGD project would bring additional socio-economic benefit to the region. However, upon cross-examination it appeared that the best the company can do in this regard is to preserve the status quo, said the AG. A company witness highlighted the fact that the Big Sandy plant consumed a significant amount of Kentucky coal, but acknowledged that only 30% of the plant’s coal was mined in Kentucky, and said that with DFGD in place, Kentucky Power would likely expand the types of coal that it uses at the plant, thus using less low-sulfur eastern Kentucky coal, and replacing it with more higher-sulfur varieties such as Illinois Basin coal, the AG noted.
Another big option is to replace Big Sandy 2 with new natural gas-fired capacity. “The Commission can take administrative notice that even if it orders the company to pursue the natural gas option, jobs will still be created for the construction of new plant, and many other workers would be needed maintain the plant once constructed,” the AG said. “While it seems clear that the PSC should at least consider socio-economic effects and impacts, they clearly must be weighed against the socio-economic impact which the massive rate hike will have for this impoverished region.”
Big Sandy 1 is a 278-MW coal unit completed in 1963. Big Sandy Unit 2 is an 800-MW unit completed in 1969. Kentucky Power said in the December 2011 application that it anticipates retiring Big Sandy Unit 1 by Jan. 1, 2015. A big negative for Unit 1 is that it lacks both selective catalytic reduction (SCR) and an FGD system and would need both for future air compliance. Unit 2 already has an SCR. Unit 1 is also a subcritical pulverized coal facility, while Unit 2 is a more efficient supercritical unit. AEP needs to do something about Big Sandy emissions under a clean-air consent decree worked out several years ago with the federal government.