Mon October 1, 2012
PSC Agrees to $58 Million Settlement in Big Rivers Rate Case
The Kentucky Public Service Commission has accepted a settlement in a rate case involving Big Rivers Electric Corp., which provides power to several electric co-ops in western Kentucky.
When Big Rivers proposed environmental upgrades earlier this year, the improvements were estimated to cost ratepayers more than $283 million. The company planned to install more stringent pollution controls at four of its power plants, and convert the coal-fired Reid Plant in Sebree to natural gas.
But the day before the case was scheduled for a hearing before the commissioners, a federal court overturned the Environmental Protection Agency’s Cross-State Air Pollution Rule. The rule would have limited sulfur dioxide and nitrogen oxide emissions from coal-fired power plants in several states, including Kentucky.
With those regulations no longer on the horizon—but with the knowledge that different re-written rules could come in the future—the company and the intervening parties worked out an agreement. Under the settlement, Big Rivers won’t undertake its two most expensive pollution control projects: a $139 million scrubber at the Wilson Power Plant in Centertown and an $81 million nitrogen oxide control system at the Green Power Plant in Sebree. The Reid plant will still be converted to natural gas, and some smaller pollution controls will be updated.
The Office of the Attorney General, the Kentucky Industrial Utility Customers, Inc. and the Sierra Club all intervened in the case. Sierra Club Attorney Kristin Henry says it didn’t make sense to require Big Rivers to comply with the recently-vacated Cross State Air Pollution Rule.
She says the company did agree to conduct full-scale testing suggested by Big Rivers’ engineer, to ensure that the new technology used to reduce nitrogen oxide doesn’t cause more than the allowable amount of particulate emissions.
But Henry says the Sierra Club’s stance is still that coal-fired power plants aren’t the least-cost option.
“Whenever they have to do their next big pollution control equipment upgrade—maybe a baghouse for particulate matter, maybe a scrubber for pollution controls—we hope the commission will recognize that these plants are not economical to retrofit and it’s more economical to retire them.”
The settlement agreement will cost ratepayers $58.5 million, an 80 percent reduction from the original proposal.