Reuters reported that Kentucky power companies Louisville Gas and Electric and Kentucky Utilities new, stricter, federal environmental regulations will force them to retire three older, coal-fired power plants.
To replace the lost coal-fired power, the companies are seeking permission from Kentucky utility regulators to build a 640 megawatt, natural gas-fired combined cycle power plant at the existing Cane Run coal plant in Louisville.
The companies are also seeking state approval to buy three small natural gas-fired turbines from Bluegrass Generation in LaGrange, Kentucky that will provide up to 495 MW during periods of peak or high demand.
The companies, units of Pennsylvania based power firm PPL had suggested in earlier filings that they could retire the 563 MW Cane Run 71-MW Tyrone and 163 MW Green River coal plants which entered service between 1953 and 1969.
Mr Paul Thompson a senior vice president at LG&E and KU said "Given the enormous cost and strict compliance timetable required to retrofit some of our aging generation units with additional technology, we've had to explore a lower-cost option that results in retiring older coal units and replacing them with natural gas units."
Over the past few years, the US Environmental Protection Agency has proposed several regulations that could shut 50,000 MW or more of older coal- and natural gas fired generation which could boost electric prices and threaten power reliability in some regions.
Environmental groups and several power companies with mostly nuclear, natural gas and renewable generating fleets however have applauded the EPA efforts. The EPA moves would reduce emissions of sulfur dioxide, nitrogen oxide and mercury and boost the amount of electricity utilities can produce with cleaner but more expensive power plants.
The Kentucky utilities said about 97% of their generating fleet is coal-fired. After the combined cycle gas plant enters service and the coal plants retire, LG&E and KU will be 90% coal-fired. In addition to the coal retirements and construction of a gas plant, the utilities said, the EPA new regulations will require installation of additional emission controls and other changes at some of their other coal plants no later than 2016 in order to maintain compliance.
They estimated compliance with the environmental rules could cost USD 4 billion in capital expenditures by 2019, with over USD 3 billion of that incurred by the end of 2016. The companies said the new natural gas generators would cost up to USD 800 million of which about USD 110 million is for the Bluegrass plant.
The companies which serve 1.2 million homes and businesses in Kentucky and Virginia did not seek to recover additional costs from their customers in their filings this week but said they would seek to recover costs in future rate cases.
(Sourced from Reuters)
