East Kentucky Power to rely on power purchase deals for the time being

East Kentucky Power Cooperative (EKPC) desires to keep its plans as flexible as possible to be able to adjust to market and load conditions as needed, so it plans to rely mostly on power purchase contracts over the next few years instead of capacity additions.

EKPC said in its 2015 Integrated Resource Plan (IRP), filed April 21 at the Kentucky Public Service Commission, that it continues to monitor its load and all economic power supply alternatives. EKPC joined PJM Interconnection in June 2013, which has significantly impacted its operations and improved its ability to economically serve its native load.

EKPC’s winter energy shortfalls were met this year with Power Purchase Agreements (PPAs). EKPC plans to continue to utilize PPAs, which can be shaped to best match EKPC’s load requirements in the short-term, unless a more advantageous alternative is identified. Even though PJM has sufficient capacity to serve its load during the winter peak season, energy prices are not guaranteed, can be extremely volatile, thus making it challenging for EKPC to secure reasonably priced energy to supply its winter peak system load, it noted.

Due to the federal Mercury and Air Toxics Standards (MATS), EKPC will be placing its coal-fired Dale Station on inactive status and rerouting the duct system at the coal-fired Cooper unit 1 to utilize the existing scrubber on Cooper Unit 2. EKPC is also considering other proposed environmental regulations, including EPA’s proposed Clean Power Plan and regulations for water and waste.

EKPC owns and operates coal-fired generation at Dale Station in Clark County (149 MW), Cooper Station in Pulaski County (341 MW), and Spurlock Station in Mason County (1,346 MW). EKPC also owns and operates gas-fired generation at Smith Station in Clark County (774 MW summer rating).

EKPC owns and operates Landfill Gas to Energy renewable generation facilities in Boone County (3.2 MW), Laurel County (4.0 MW), Greenup County (2.4 MW), Hardin County (2.4 MW) and Pendleton County (3.2 MW).

EKPC purchases hydropower from the Southeastern Power Administration (SEPA) on a long-term basis. Laurel Dam (70 MW) historically has been a reliable resource. However, due to various repair projects, EKPC’s 100 MW allocation from the Cumberland System has not provided dependable capacity and energy for several years and is not expected to be considered 100% dependable until spring 2018. Once the dam repairs are completed, the capacity should return to firm dependable status for the long-term.

EKPC’s experiences in January 2014 and February 2015 solidified the need to seeure price hedges for its winter load position. PPAs, along with owned generation, met most but not all needs for EKPC during the 2014-2015 winter peak period. That need will increase when the Dale 3 and 4 units are placed on inactive status in April 2016, due to not being compliant with MATS. EKPC will either need to continue to enter into PPAs going forward or pursue other economic power supply alternatives identified in its request for proposals (RFP) process. EKPC will seek to find the most economical alternative to meet its power supply requirements and meet future EPA rules. EKPC refreshed its RFP offers in summer 2014 and said it is currently negotiating with a third party for a potential long term solution to its winter capacity needs.

In August 2013, EKPC filed an application for a Certificate of Public Convenience and Necessity (CPCN) for the rerouting of certain duct work at its J. S. Cooper station near Bumside, Ky., and approval of an amendment to its environmental compliance plan for purposes of recovering the costs of this project through anenvironmental surcharge. Cooper has two baseload coal-fired units. Cooper Unit 1, which became operational in 1965, has a rated capacity of 116 MW. Cooper Unit 2, which became operational in 1969, is rated at 225 MW of capacity. EKPC proposed to re-route the existing duct work for Cooper Unit 1 such that its emissions are able to flow to the Cooper Unit 2’s Air Quality Control System (AQCS) to enable Cooper Unit 1 to satisfy air emission regulations. The capital cost of the project is estimated to be $15 million. In February 2014, the PSC granted EKPC’s request. The construction is scheduled to begin in the summer of 2015 with the tie-in of the new duct work during October 2015. The system will be commissioned in November to ensure performance and reliability prior to the winter months and the extended MATS compliance deadline in April 2016.

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.