Ky AG wants hold on biomass case while coal issue is cleared up

The Kentucky Power unit of American Electric Power (NYSE: AEP) is seeking approval from the Kentucky Public Service Commission of a contract to buy power from a new biomass-fired power plant, but a potential hitch has turned up in that process.

The utility has worked out a Renewable Energy Purchase Agreement (REPA) with EcoPower Generation-Hazard LLC for 58.5 MW (net) of energy and capacity from biomass. “The EcoPower REPA is a reasonably necessary and appropriate way for Kentucky Power to diversify its fuel base and meet its customers’ needs,” said the utility in an April 10 application.

But, the Kentucky Attorney General’s Office of Rate Intervention on June 5 filed a motion with the PSC to hold this case in abeyance until after the PSC rules in a separate case about a request for proposals (RFP) for 250 MW of capacity which could be used by Kentucky Power to replace the capacity of the coal-fired, 268-MW Big Sandy Unit 1. The utility plans to shut Big Sandy Unit 2, with the RFP needed to gauge the relative merits of shutting Unit 1, converting it to firing natural gas or replacing it entirely with outside power.

Kentucky Power has confirmed that nothing in the outstanding request for the RFP would prevent a merchant generator, including a bidder proposing renewable energy resources, from tendering a proposal to replace capacity at Big Sandy Unit 1, the AG noted. Since responses to the Big Sandy Unit 1 RFP are expected by June 11, and need to be filed with the commission by June 28, it would be illogical, unnecessary, and contrary to judicial economy to proceed with the EcoPower proceeding in the meantime, said the Attorney General’s office.

Also on June 5, Kentucky PSC staff filed their latest request with Kentucky Power for additional information related to the EcoPower REPA. Staff noted that in a prior response to a data request, the utility said that the REPA “would be a very small addition that only assists with the Company’s total capacity and energy needs after the Company’s base load is covered by the Mitchell transfer.” That is a reference to another pending case where Kentucky Power is looking to get part of the Mitchell coal plant in West Virginia to replace the 800-MW Big Sandy Unit 2.

One of the staff questions was: “Would the capacity and energy associated with the REPA still be needed if Kentucky Power were to ultimately determine that repowering Big Sandy 1 would be the most cost-effective disposition for that generating unit?”

EcoPower wants to develop biomass-fired plant in Perry County

EcoPower Generation-Hazard is a wholly owned subsidiary EcoPower Generation LLC. By order dated May 18, 2010, EcoPower was authorized by the Kentucky State Board on Generation and Electric Transmission Siting to construct the nominal 58.5 MW (net) biomass power generating facility and the associated 69-kV non-regulated transmission line in Perry County, Ky.

On March 15, Kentucky Power entered into a 20-year REPA with EcoPower for the purchase by Kentucky Power of the entire capacity value, electrical output, ancillary services, and environmental attributes of the EcoPower facility to be located in the Coal Fields Regional Industrial Park in Perry County.

The EcoPower facility will be located about 10 miles northwest of Hazard at the site of a reclaimed coal mine. The EcoPower facility will consist of one fluidized-bed boiler and steam turbine generator, air cooled condenser, material handling systems, ancillary equipment, several buildings, and a 1.54-mile 69 kV transmission line. The EcoPower facility will be fueled with biomass, including sawdust, bark, wood chips, tip wood, and low-quality logs.

Kentucky Power’s obligations under the REPA are expressly contingent upon the utility’s receipt of a final and non-appealable PSC approval by Oct. 15, 2013.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.