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LG&E Will Try to Recoup August Storm Costs

As expected, Louisville Gas and Electric is asking the Kentucky Public Service Commission to let it recover costs the incurred during last August’s storm.

The wind storm knocked down trees and power lines throughout the county, and 126,000 customers were without power.

Restoring power required outside contractors, and cost LG&E more than $7 million. If the PSC approves the rate increase, the utility estimates it will raise the average residential bill by about 20 cents a month.

Environment Uncategorized

LG&E, KU Plan to Switch Units From Coal to Gas Part of a Nationwide Trend

Last week, Louisville Gas & Electric and Kentucky Utilities announced a plan to retire three coal-fired power plants over the next four years. The plants will be replaced by facilities that burn natural gas—which is cleaner than coal. The utilities are part of a growing trend across the nation to retire older coal plants.

To most people, a gas turbine doesn’t sound any different than a jet engine, or than the sounds you’d expect to hear in a coal-fired power plant. But in terms of what this sound means for the region’s energy mix, it’s a big deal.

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There are gas plants in Kentucky, but more than 90 percent of the electricity generated in the commonwealth comes from coal. Now, LG&E and KU plan to spend about $700 million building a new natural gas power plant at the Cane Run site and purchasing existing turbines in Oldham County.

“The Midwest and the Southeast, particularly, have been heavily dependent on coal-fired power plants and have been slow to adopt other technologies,” said Stephen Smith, the executive director of the Southern Alliance for Clean Energy.

Kentucky, West Virginia, Missouri, Ohio, Indiana, Georgia and Tennessee are all states that get most of their energy from coal. But that’s slowly changing.

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LG&E, Kentucky Utilities To Replace Three Coal Plants With Natural Gas

One of Louisville’s two coal-fired power plants will be taken offline in the next five years. By 2016, Cane Run Power Station will be replaced by natural gas—a fuel that’s cleaner than conventional coal.

Louisville Gas and Electric and Kentucky Utilities will retire the Cane Run plant in southwest Louisville, as well as two other coal-fired plants in Kentucky. The company plans to build one natural gas-fired plant on the Cane Run site and purchase an existing gas plant in Oldham County.

“This was based on the new EPA regulations,” LG&E spokeswoman Chris Whelan said. “We looked at what we were going to have to do to be in compliance with those new regulations.”

The company decided it would be cheaper to replace the coal plants with natural gas than to install advanced pollution controls on the aging units. Whelan says if the deal is approved by the Public Service Commission, it won’t affect the rate increase that’s pending or future LG&E rates.

“Based on the allocation of energy, the new plant is not expected to increase LG&E’s rates,” she said. “This particular filing is just for the application to get approval to actually build something, but even then we’ve estimated that LG&E will not see an increase.”

But KU customers could see a four percent increase in their rates.

The switch to natural gas could be a harbinger of things to come for the state’s coal industry. Bill Bissett of the Kentucky Coal Association says the new pollution rules should be coming from Congress, and not the Environmental Protection Agency.

“This is an economic issue that goes way beyond just the ratepayers within the footprint of this power plant but could affect the commonwealth’s economy,” he said. “As we see this movement from D.C. to move us away from coal, the question I think both the PSC as well as Congressional leaders outside of Louisville need to ask themselves, what is this going to do to the economy of Kentucky overall, not just our kilowatt per hour?”

LG&E used primarily Kentucky coal in the Cane Run plant, according to Whelan. The natural gas to run the new units will come from Texas Gas Transmission, whose pipelines start in the Gulf. Some employees might lose their jobs during the transition, too.

But for those who live in the shadow of the Cane Run plant, the news was well-received.

“I think I’m optimistic,” said Kathy Little. Little lives next door to the Cane Run plant and has raised concerns about the plant’s storage of coal ash. At Cane Run, the ash is stored in a pond and open landfill, and Little has documented ash blowing off the property and into their neighborhood.

“The news that there won’t be any more particulates after awhile, obviously is good news,” she said.

The Louisville Air Pollution Control District has issued one notice of violation for the Cane Run Plant, and is investigating other issues. The coal ash landfill and pond at Cane Run will stay on the site—once they’re no longer in use, they’ll be capped. Little says she looks forward to cleaner air when she’s living next to a natural gas-fired power plant, but there are still lingering concerns of water contamination from the coal waste.

Environment Local News

LG&E to Replace Coal-Fired Cane Run Plant With Natural Gas

Louisville Gas & Electric announced today that its coal-fired power plant in southwest Louisville will be taken offline by 2016. The company will build a new natural gas-fired plant on the same property.

This is an option LG&E has been weighing publicly since April. In an interview earlier this summer, Vice President John Voyles said the final decision would come down to whether it was cheaper to retrofit Cane Run with newer pollution controls to meet upcoming federal standards or replace the plant altogether.

“So we’ve evaluated what it takes to meet the new rules and we have a cost,” he said. “We’ve also looked at what it would cost to replace that with a different source, maybe close that unit. And our early analysis says the cost of putting controls on at this facility are higher than the cost of another option.”

Lately Cane Run has been under scrutiny as neighbors complain about air pollution stemming from the coal ash stored on the site.

The move still has to be approved by the Public Service Commission, which will need to ensure that the company can generate enough power to meet consumer demand with the new plant.

Environment Local News

PSC Will Hold Public Meeting on Utility Increases in Louisville Tonight

One of the Kentucky Public Service Commission’s public meetings on proposed utility rate increases is scheduled for tonight in Louisville. Commissioners will give an educational presentation about the request, then take testimony from the public.

Louisville Gas and Electric and Kentucky Utilities have requested that the PSC allow them to raise utility rates to pay for environmental upgrades to their power plants. LG&E estimates total electric bills will rise by about 19 percent by 2016 for their customers, and KU customers will see bills increase by about 12 percent.

PSC spokesman Andrew Melnykovych says public meetings are useful as the commissioners weigh whether or not to grant rate increases. Yes, he says, people often just complain about having to pay higher rates. But at a hearing in a Kentucky Power case a few years ago:

“People said, ‘and I’m particularly angry about these higher rates because this utility has not done what we think is an adequate job in maintaining its rights of way and therefore their reliability is lower than it ought to be because things fall across their lines all the time and we lose power,’” he said.

The utility ended up settling for half of what it asked for.

The public meeting is at 5:30 tonight at Louisville’s Johnson Traditional Middle School.

Environment Local News

Obama Administration Withdraws Draft to Strengthen Ozone Standards

As Louisville suffers a string of bad air quality days due to high ozone levels, the Obama Administration has announced that it’s withdrawing a proposal to strengthen the nation’s ozone standard.

President Barack Obama has asked Environmental Protection Agency Administrator Lisa Jackson to withdraw a draft proposal that would tighten the Ozone National Ambient Air Quality Standards. The proposal would have placed stricter regulations on polluters and required major environmental upgrades for most industries to comply with the Clean Air Act.

The EPA had predicted the proposed rule would protect the health of children and economically-vulnerable citizens. In a statement, Mr. Obama reiterated his administration’s commitment to protecting public health and the environment, but said the new ozone standard would create regulatory uncertainty in uncertain economic times.

The move was widely criticized by environmental groups, who saw the move as capitulation to the GOP.

The announcement won’t affect Louisville Gas & Electric and Kentucky Utilities’ proposed rate increases before the Public Service Commission. Because the rule was a draft rule, it wasn’t factored into the company’s estimates of environmental upgrades.

The EPA plans to revisit the ozone rule in 2013.

Environment Local News

Storm Damage May Lead to Higher Electricity Rates

Saturday evening’s storm knocked out power to more than 120,000 area residents, and crews have been working since then to restore electricity. The work will be expensive, and ratepayers will shoulder the burden.

Louisville Gas & Electric and Kentucky Utilities have a special account they use to finance storm damages. But in the case of an event like this weekend’s, it probably won’t be enough and the company is allowed to raise rates to pay for repairs.

After wind and ice storms only four months apart battered the city in 2008 and 2009, the Kentucky Public Service Commission issued a report with a series of recommendations to help utility companies prepare for the next huge power outage. PSC spokesman Andrew Melnykovych says the commission didn’t recommend buying storm damage insurance to cushion the eventual blow to consumers.

“It’s prohibitively expensive,” he said. “So the ongoing cost to the ratepayers to purchase the insurance, if they could get it—most underwriters won’t even write that kind of insurance for utilities anymore—if they could get it, it would be extremely expensive.”

Melnykovych says if the utilities do seek to recoup the costs, it’ll only be for a set amount of time.

“Typically it’s anywhere from five to ten years,” he said. “And once they’ve recovered that that portion of the rate goes away. The rate that we’re now paying to LG&E and KU right now reflects a substantially, what’s much larger than this is going to be, regulatory asset that was established to cover the 2008 and 2009 storms.”

LG&E and KU won’t be able to recoup the costs of recovering from last weekend’s storm until January 2013. That’s the earliest base rate increases are allowed to go into effect.

Environment Local News

Most Area Residents Should Have Electricity By Wednesday

Power should be restored to all but a few Louisville Gas & Electric customers by tomorrow. After the storm hit on Saturday, more than 119,000 in Louisville were without electricity. At 5:00p.m. there are currently more than 20,000 in Jefferson County without power.

LG&E spokesman Chip Keeling says residents should have power by Wednesday at the latest.

“I think we’re going to get the majority of our customers up today and tomorrow and we’ll have some stragglers on Wednesday,” he said. “And when I say ‘stragglers,’ I’m talking about houses where there’s a circuit where there’s a dozen or less on it.”

These are areas with lower population density farther from downtown.

Local News

Schools Close as Power Restoration Continues

The first day of classes at Jefferson County Public Schools has been postponed due to power outages.

Saturday’s storm knocked out power to about 30 schools and dozens of traffic lights, making teaching and transportation difficult.

“With the uncertainty, the best thing to do is what’s certain,” says Superintendent Donna Hargens. “Our top priority is to make students safe so they can learn and we will make up the day.”

No decision has been made on classes for Tuesday, but schools do have priority for power restoration, behind hospitals and police and fire stations.

“During the ice storm and the wind storm we had 80 schools down, to give you an idea of the complexity of this. We’re not as bad as we were in those instances,” says director of facilities Mike Mulheirn.

As of 2:00, 59,000 LG&E customers in Jefferson County were without power. In southern Indiana, 12,000 Duke Energy customers were without power.

LG&E/KU Outage Map
Duke Outage information

Utility crews have been called in from other states and LG&E is still assessing the extent of the damage.

“We are gonna hit it hard, fast and aggressively. That’s why we’re pulling every resource we can from that wide array of states. We’re on it. We’ve got all the mutual aid communications open and we’re getting what we’re asking for,” says LG&E Senior Vice President Chris Hermann.

Hermann says it’s too early to give a more precise estimate, but power could be restored to most customers by the middle of the week.

An LG&E spokesman says the company will try to recoup the cost of recovery through a rate increase. LG&E is currently seeking a rate increase to cover the cost of bringing power plants into compliance with federal regulations.

Environment Local News

UPDATED: More Coal Ash Problems at Cane Run

Even though problematic machinery was briefly taken offline, there are still problems with coal ash at Louisville Gas & Electric’s Cane Run power plant. Residents are reporting seeing coal ash coming out of the plant and into the air both yesterday and today.

LG&E took the sludge processing plant out of commission after it malfunctioned, releasing clouds of coal ash. They started it up again last night, and LG&E spokesman Chip Keeling said it was operating correctly.

“The unit’s repaired now, and everything’s functioning just like it should,” he said. “Just normal.”

But residents documented clouds of ash rising above the plant. Keeling says a puff of dust when the machine started back up is normal.

“The puff lasted about 10 seconds,” Keeling said.

Greg Walker lives 50 yards away from the power plant’s landfill. He says the release lasted at least four hours—maybe longer, but it got dark. And this afternoon, more dust was spewing out of the same faulty sludge processing plant. Walker watched it, along with an official from the Air Pollution Control District.

“4:40 in the afternoon I’m looking at coal ash, dust blowing out of the sludge plant right in front of me,” Walker said. “APCD is sitting here watching it, LG&E employees have seen us and they keep on running it.”

As a short-term fix, Keeling said the sludge plant’s doors and windows were covered to help contain the dust. In the long term, he says the company is planning to encase the sludge processing plant in a structure to minimize the ash that gets out.

UPDATE: As of 7:15p.m., LG&E officials have temporarily shut the sludge processing plant down.