The Kentucky Public Service Commission, on its own motion, on Feb. 11 opened a case where it will look at the accuracy of documents filed by Kentucky Power in support of its Fuel Adjustment Clause (FAC).
Utilities in Kentucky file twice-yearly FAC cases. In support of its FAC, Kentucky Power files monthly with the commission certain documents and schedules containing back-up information on the generation levels and fuel consumed at each generating unit. This back-up information includes purchases and inventory levels, the name of the supplier, the quantity of fuel purchased, the price for the fuel, and the price for the transportation. One of the schedules filed monthly is titled “Analysis of Coal Purchases,” and it contains details of each coal purchase, including the state and coal district from which the coal is mined.
According to the Analysis of Coal Purchases filed by Kentucky Power, all of the coal that it purchased each month since February 2013 was mined in Kentucky, from District 08, which is in eastern Kentucky. However, a review of a Kentucky Power response to a request for information filed in the record of FAC Case No. 2015-002321 indicates that from November 2014 through April 2015, approximately 90% of the coal purchased by Kentucky Power was mined in West Virginia, not in Kentucky.
“Based on a review of the FAC documents and schedules filed by Kentucky Power, and being otherwise sufficiently advised, the Commission finds that an investigation is necessary and appropriate to review the accuracy of all FAC documents and schedules filed monthly by Kentucky Power since February 2013,” said the Feb. 11 order. The commission gave Kentucky Power 20 days to file written testimony of one or more witnesses addressing the apparent conflict in its FAC filings.
That testimony would include the following issues: a discussion of the reasons why Kentucky Power’s monthly Analysis of Coal Purchases lists all coal as being mined in Kentucky, while the data response in Case No. 2015-00232 lists about 90% of coal purchased as being mined in West Virginia; a discussion of any changes or corrections needed to the FAC documents and schedules previously filed by Kentucky Power, along with copies of the changed or corrected FAC documents and schedules; a list of the names, titles, and description of duties of each individual who handled the FAC filings since February 2013; and a detailed description of the internal review process utilized prior to the filing of monthly FAC documents and schedules to verify their accuracy. Upon the filing of this testimony, a procedural schedule will be established for processing this case.
One apparent issue that may be causing this data problem is the transition of coal-fired capacity for Kentucky Power, a unit of American Electric Power (NYSE: AEP). The utility in May 2015 retired its 800-MW Big Sandy Unit 2 due to the federal Mercury and Air Toxics Standards, and is in the process of switching the smaller Big Sandy Unit 1 to natural gas for the same reason. That will end coal use at the plant, which traditionally burned eastern Kentucky coal. The PSC, in the meantime, approved the utility to buy half (about 800 MW) of the Mitchell power plant in northern West Virginia to replace Big Sandy Unit 2. That plant burns Northern Appalachia coal, much of it from nearby mines in northern West Virginia.
The utility in August 2015 reported to the commission that from November 2014 through April 2015, the actual amount of coal burned in tons, the actual amount of coal deliveries in tons, the total kWh generated, and the actual capacity factor at which the plant operated were:
- Coal burned – 1,075,834 tons;
- Coal delivered – 829,309 tons;
- Total MWH generated – 2,667,082
- Capacity factor – 56.95%
- Coal burned – 661,623
- Coal delivered – 656,375
- Total MWH generated – 1,655,419
- Capacity factor – 45.09%