Environmental Groups Say Burning Coal at Big Sandy Isn’t Least-Cost Option

by Erica Peterson on March 14, 2012

Two environmental groups are contesting an application filed with the Public Service Commission by an eastern Kentucky power company. They say retrofitting the Big Sandy power plant to continue burning coal will be more expensive than the company reported.

In December, Kentucky Power filed an application with the Public Service Commission to spend $940 million retrofitting the Big Sandy Power Plant in Lawrence County. The plant burns coal, and the company—which is owned by American Electric Power—is asking for PSC approval to install pollution controls and continue burning coal.

But the new filings in the case by the Sierra Club and Earthjustice argue that the company low-balled the estimated cost, and that the plant retrofit isn’t the most cost-effective option. Lauren McGrath of the Sierra Club’s Kentucky chapter says the group hired consulting firm Synapse Energy to analyze AEP’s proposal.

“The report that came out from Synapse Energy said that rather than making this upgrade, replacing the plant with energy efficiency, renewable energy and natural gas would be a better scenario for ratepayers than what AEP was proposing,” she said.

The Synapse analysis didn’t include a set dollar amount that the company could save by closing the plant and replacing the generation with the alternatives.

McGrath says it’s a rare occasion where the environmental groups agree with some of the other industries who are opposing the application.

“They are realizing that this is going to impact their bottom line and when they looked at it, they said this definitely wasn’t the least-cost option and it would be better to retire the plant than to make this investment,” she said. “And so it’s a scenario where we actually are on the same page as these other major industrial consumers and customers in eastern Kentucky, saying the same thing.”

The Kentucky Industrial Utility Customers, which represents several major electrical consumers, has also submitted testimony recommending the aging plant be retired.

The PSC will hold a hearing on the Big Sandy application April 16—by law, commissioners have to approve whatever plan provides the most reliable energy at the least cost to consumers.

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