Kentucky Utilities on Oct. 31 filed with the Federal Energy Regulatory Commission revised rate schedules between KU and certain of its Kentucky Municipal Customers to account for the retirement of certain surface impoundments (e.g. coal ash ponds) in compliance with various federal and state environmental requirements.
KU is making this filing in order to include the costs of these Asset Retirement Obligations (AROs) in the formula rates KU uses to calculate charges for its Municipal Customers. KU’s AROs are the result of a variety of recent federal and state environmental requirements that impact several surface impoundments located at various KU generating stations, including current and anticipated environmental requirements related to the Federal Coal Combustion Residual Rule (CCR Rule).
With regard to surface impoundments, such as ash ponds, the CCR Rule applies to new surface impoundments that are designed to hold an accumulation of CCR and liquids for purposes of treatment, storage, or disposal. Furthermore, the rule requires corrective action for surface impoundments that are affecting groundwater at unacceptable levels. KU’s ash ponds at the Ghent, Trimble County and E.W. Brown power plants fall under the type of surface impoundments governed by the CCR Rule.
Across the industry, the CCR Rule’s new performance standards for surface impoundments is generally expected to result in the closing of many CCR impoundments by replacing them with landfills, thus requiring a move from wet to dry handling and storage of CCR. Additionally, utilities such as KU will have to comply with several other new or revised environmental regulations in the near future, including the Effluent Limitations Guidelines (ELG) proposed by the U.S. EPA under the Clean Water Act.
Although the CCR Rule does not apply to certain of KU’s ash ponds associated with inactive generating stations such as Pineville, Green River and Tyrone, those ash ponds are still subject to special waste landfill laws enforced by the state of Kentucky. Furthermore, under EPA’s ELG, the water within these same ash ponds could be considered “legacy wastewater,” thus prohibiting KU from adding wastewater to the impoundments, which KU currently does from various sump pumps located at the inactive generation stations. The combination of these various environmental requirements will force utilities such as KU to close their respective ash ponds associated with these inactive generating stations as well.
As required by the CCR Rule, KU will be closing surface impoundments at the Ghent, Trimble and E.W. Brown stations. Specifically, KU will be closing five surface impoundments at Ghent, two surface impoundments at Trimble, and one surface impoundment at Brown by 2023. Although KU is still in the process of implementing new groundwater monitoring and data evaluation procedures in compliance with the CCR Rule, existing sampling data from Ghent, Trimble, and E.W. Brown indicate that the statistical thresholds that trigger closure for unlined surface impoundments will be exceeded for the impoundments for each of these facilities. Therefore, there is a high probability that closure requirements will be triggered for surface impoundments at those stations once the groundwater monitoring program required by the CCR Rule has been fully implemented.
KU said that in light of the extremely short amount of time (six months) the CCR Rule allows between a “triggering” event requiring the initiation of closure of a CCR surface impoundment (i.e., once the analysis of CCR Rule monitoring data shows CCR constituents at statistically significant levels above groundwater protection standards) and the initiation of such closure, it is prudent for KU to move forward now with its plans to close these ash ponds and arrange for alternate means to manage CCR. Failing to do so would pose an unacceptable risk of having to cease generation at those stations in the future due to a lack of adequate means to manage CCR.
In addition to the closures at the Ghent, Trimble, and Brown stations, KU will also be closing the surface impoundments at Green River, Pineville and Tyrone. KU will close three ash ponds at Green River, one at Pineville, and one at Tyrone. Because active generation had ceased at these stations prior to the Oct. 19, 2015, effective date of the CCR Rule and the ash ponds at these facilities are inactive (i.e., not receiving CCR), the CCR Rule does not apply. Instead, the surface impoundments at these three locations are governed by Kentucky state requirements applicable to special waste landfills.
KU plans to complete closure of the ash ponds at Green River, Pineville and Tyrone by 2019. The Ghent, Trimble and Brown closures should be complete by 2023. KU estimates the costs of the various surface impoundment closures are:
- $56.8 million for Green River;
- $8.0 million for Pineville;
- $13.1 million for Tyrone;
- $249.9 for million Ghent;
- $62.7 for million Trimble; and
- $32.7 million for Brown.
KU proposes to amortize the costs of the Ghent, Trimble and Brown ash pond closure projects on a non-levelized basis over a twenty-five year period starting in July 2016 if the waiver is granted or starting the date new rates from this proceeding are effective should the waiver be denied.