Kentucky regulators confirm Kentucky Power ‘lacks consent to begin construction’ on 138-kV project

According to Kentucky Power, Braidy Industries has indicated that it anticipates that the financing funds will be transferred to Braidy Industries in the December timeframe

The Kentucky Public Service Commission, in an order entered on Aug. 29, said that until a condition precedent imposed by an October 2018 commission order is satisfied, Kentucky Power lacks consent to begin construction on the EastPark 138-kV transmission line, a new substation, and related work at other locations.

As noted in the order, Kentucky Power filed a motion on Aug. 12 to clarify and confirm the October 2018 order conditionally granting it a certificate of public convenience and necessity (CPCN) to build the line, substation, and related work. Specifically, the commission said, Kentucky Power seeks confirmation that due to the conditional nature of the CPCN, the one-year time limit set for construction to begin before a CPCN becomes void does not begin to run until the CPCN becomes unconditional.

As noted in Kentucky Power’s motion, the company filed its application in June 2018 seeking a CPCN to build the 2.7-mile, 138-kV transmission line to the EastPark Industrial Center in Boyd County, Ky.; to build the Moore Hollow 138-kV substation; and to perform related work at other locations.

The commission entered an order in October 2018 conditionally granting the company’s application; the grant of the certificate was conditioned on Braidy Industries, Inc., furnishing – and Kentucky Power filing of record in the proceeding (Case No. 2018-00072) – reasonable written assurance by Braidy Industries that it has obtained financing “to complete construction of the planned facility.”

Braidy Industries recently confirmed to Kentucky Power that Braidy Industries continues to work to secure financing to complete construction of the facilities, the company added in its motion, noting that Braidy Industries indicated that it anticipates that the financing funds will be transferred to Braidy Industries in the December timeframe.

Under the express terms of the commission’s October 2018 order, Kentucky Power lacks the authority to begin construction of the line, substation, and related facilities prior to the satisfaction of the conditions on the commission’s grant of the CPCN. Kentucky Power added that because the commencement of the one-year period to begin construction in good faith of the new facilities is tied to the existence of the authority to begin construction, and not simply the issuance of the order granting the CPCN, the one-year statutory period will not begin until the certificate becomes unconditional.

Kentucky Power said that it requests that the commission confirm that the one-year period for beginning construction on the EastPark Project will not begin until Braidy Industries provides Kentucky Power with the required written assurance required by the commission’s order and the company makes the required filing. Kentucky Power said that departing from the commission’s own precedent by starting the statutory period prior to the satisfaction of the commission-initiated condition would be unreasonable and impose burdens on the commission and company alike. Kentucky Power said that it anticipates that if required to file a new application in the likely event that it is unable to begin construction prior to Oct. 5, the proceedings would be essentially identical to those in this case.

Kentucky Power requested that the commission enter an order confirming that the one-year period for beginning construction in connection with the commission’s October 2018 order conditionally granting Kentucky Power a CPCN to build the line and related work is the date Kentucky Power satisfies the conditions imposed by the order.

In its order, the commission said that it finds that its October 2018 order states that the facilities to be built by Kentucky Power are needed to serve a new industrial customer but that no construction is to begin until the new customer provides in writing reasonable assurance of sufficient financing to complete construction of its industrial plant.

The commission also said that upon Kentucky Power’s receipt and post-case filing of the industrial customer’s assurance of financing, the CPCN conditionally granted by the October 2018 order is to become unconditional and the one-year time limit set shall begin to run.