KYsaysNO

(Kentucky) Environmentalists say costs are too high for new plant
Tue, Apr. 07, 2009
By Scott Sloan
ssloan@herald-leader.com

A group of Kentucky environmentalists unveiled a new report on Tuesday disputing East Kentucky Power Cooperative's need for a new coal-fired power plant.

Members of the Kentucky Environmental Foundation, Kentuckians for the Commonwealth and the Cumberland Chapter of the Sierra Club said the plan for a new facility in Clark County is bad both for the environment and the co-op's struggling finances.

The co-op, which has raised the price of its service each of the past three years, provides electricity to 16 member co-ops that power more than half a million homes, farms and businesses in Central and Eastern Kentucky.

The groups commissioned a study by a New York-based public policy and financial consulting firm that recommended the project be abandoned in favor of enhanced energy efficiency programs, renewable energy sources and natural gas.

"This case is a business and finance case," said Tom Sanzillo of TR Rose Associates prior to unveiling his findings.

He said East Kentucky Power produces about 97 percent of its electricity by burning coal in contrast to a general measure of around 50 percent for other utilities nationally.

Abandoning plans for another coal-fired power plant, which would be the first such generator at East Kentucky Power's Smith property in Clark County, would save around $500 million in long-term debt, he said.

East Kentucky Power spokesman Nick Comer could not be immediately reached on Tuesday.

The co-op has said it is dedicated to energy efficiency and renewable sources of energy, but those are not yet able to meet the demand from its customer base.

The report referenced in this article reached the following conclusions:

• The Cooperative’s priority to build new coal-burning power plants is misaligned with the direction of capital markets and national energy policy.
• EKPC’s current financial position is weak, and its decision to build Smith #1 is one of the main impediments to improving its credit status.
• EKPC’s financial statements and accounting practices warrant review.
• EKPC underestimates the cost of power from the Smith #1 plant.
• The justification for the Smith Plant is weak, and EKPC has acknowledged a recent drop in demand for electricity.
• Stopping the Smith #1 plant will avoid an additional price increase to ratepayers of at least 5% to recover the costs of building and operating the new plant.
• The Cooperative has options to reduce losses and recover some of the money it has already spent on Smith #1.

Similar conclusions were reached in a financial report released last October on the proposed Santee Cooper coal plant. Read more about the Kentucky report here, or read the South Carolina report here.