June 29, 2010
Opponents say PSC action vindicates their position on proposed power plant
Group introduces new management team

By Bill Robinson
Senior News Writer

RICHMOND — Opponents of a coal-fired generating plant that East Kentucky Power Cooperative proposes to build near the Kentucky River in Clark County across from Madison County say the decision last week by the state Public Service Commission to review “the need for and cost of” the plant vindicates their position.

The Winchester-based cooperative, which generates power for 16 rural distribution cooperatives, is open to all options, even as it continues to pursue air and water permits for the 278-megawatt plant, said spokesperson Nick Comer. More than 500,000 homes, farms and businesses receive their electricity from the co-ops, including Bluegrass Energy and Clark Energy that serve parts of Madison County.

EKPC will provide information for the state regulatory agency’s evaluation as its new management team “steps back” to conduct its own review and works on a new strategic plan for the non-profit co-op, Comer said.

According to the PSC announcement, issues raised by the complainants justify a re-examination of the impact construction of a new coal-fired plant would have on the co-op’s rates and finances and whether it is the least-costly option of meeting new demand.

The PSC directed EKPC to provide data on which it estimates future demand, steps it is taking to reduce demand through conservation and increased efficiency, as well as updated estimates of the plant’s cost and its potential impact on member rates and the co-op’s finances.

A hearing will be scheduled later this year, according to the PSC statement.

Because the PSC primarily regulates utility finances and consumer rates, the review will not consider the plant’s environmental impact.

More than four years ago, the state agency gave EKPC a green light to proceed with plans for the plant that it proposed to construct near Ford on the Kentucky River across from Madison County. The co-op supplies power for Bluegrass Energy

In that time, according to the PSC, the plant’s estimated cost has nearly doubled, and the 60,000 member Warren Rural Electric Co-op decided to affiliate with the Tennessee Valley Authority rather than EKPC.

In April, the co-op asked to withdraw its request to increase its borrowing authority by more than $900 million to build the plant, but did not ask to withdraw its construction certificate.

Since 2009, some members of the distribution co-ops, aided by three Berea-based environmental groups, have actively opposed the plant, claiming it will degrade both air and water as well as become a financial burden to rate payers.

In October of last year, three co-op members — author Wendell Berry, along with John Patterson and John Rausch — were joined by the Kentucky Environmental Foundation, Kentuckians for the Commonwealth and the Sierra Club, in filing a complaint with the PSC challenging the decision to allow the plant’s construction.

The groups also have opposed the granting of air and water quality permits for the plant. Federal regulatory agencies, including the Environmental Protection Agency and the U.S. Army Corps of Engineers, will need at least another nine months to complete their reviews, Comer said.

Because the environmental groups are not co-op members, the PSC last week ruled they could not be parties to the complaint. However, it last week allowed Gallatin Steel Co. of Warsaw, one of the co-op’s largest users of electricity, to join the complaint.

An audit of EKPC ordered by the Kentucky Public Service Commission and released in April was highly critical of EKPC management and its lack of an updated strategic plan. While the audit questioned justification of a new generating plant, it focused mainly on broader management and financial issues.

“Regulatory agencies keep marching forward with permitting as if they had blinders on, oblivious to the overwhelming financial hole EKPC is facing,” said Elizabeth Crowe, executive director of the Kentucky Environmental Foundation. “Problems as deep as EKPC’s affect every part of a company’s operations, and the only viable and logical action for any agency involved in reviewing the Smith plant to take is to put a stop to EKPC’s financial recklessness – before it wrecks both our air and our wallets.”

Among the options that EKPC will consider in its self-review are: purchasing power from other providers and using other fuels such as natural gas, which burns cleaner than coal, as well as stepped-up conservation and efficiency measures.

Maintaining a reliable and affordable supply of electricity will remain priorities for the EKPC, Comer said, along with reducing financial risks and environmental impacts.

On July 6, EKPC will install a new chief financial officer, Mike McNalley, who comes from Detroit Edison, where he served as director of energy efficiency and business energy services.

“Mike offers extensive knowledge, skills and experience in corporate finance and the energy industry,” said Anthony “Tony” Campbell, EKPC president and chief executive. “His leadership will be essential as our cooperative continues to strengthen its financial condition and builds equity for the future.”

Other new top managers at EKPC include interim Chief Operating Officer Mike Steffes, who comes from ACES Power Marketing Carmel, Ind., and interim Vice President of Power Supply Chad Ferguson, formerly manager of Integrys Energy Services’ Midwest trading desk. Both were installed May 27.

Bill Robinson can be reached at brobinson@richmondregister.com or at 624-6622.