Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) applied Aug. 14 at the Federal Energy Regulatory Commission for waiver and request for expedited review in connection with accounting treatment for a proposed refined coal sale arrangement between LG&E/KU and Clean Coal Solutions LLC (CCS).
For several months, LG&E/KU have been engaged in negotiations with CCS, a vendor that uses proprietary technology to produce refined coal by treating coal supplies with emissions-reducing compounds. The parties are contemplating entering into up to three separate agreements under which CCS, through one or more individual subsidiaries, will install, operate, and maintain at its own expense, refined coal production facilities at up to three of LG&E/KU’s coal-fired power plants.
CCS will use these facilities to produce refined coal by applying emissions-reducing compounds to LG&E/KU coal supplies sold by LG&E/KU to CCS. CCS will then sell the refined coal back to LG&E/KU for combustion, with CCS receiving the benefit of a Section 45 production tax credit on a per-ton basis. Once CCS’ refined coal production facilities are installed at LG&E/KU’s stations, LG&E/KU will provide two primary services to CCS: coal yard site licensing; and coal yard services. In consideration for these services, CCS will pay to LG&E/KU a fee for each ton of refined coal produced at the facilities.
The specific facilities contemplated to host these projects are: the Ghent Generating Station, located on the Ohio River, northeast of Carrollton, Kentucky, and 100% owned by KU; the Mill Creek Generating Station, located in southwest Jefferson County, Kentucky, and 100% owned by LG&E; and the Trimble County Generating Station, located on the Ohio River in Trimble County, Kentucky. Trimble County Unit 1 is 75% owned by LG&E, and Trimble County Unit 2 is 60.75% owned by KU and 14.25% owned by LG&E.