Sometimes, there just aren’t any good ways out of a problem. That’s called a dilemma: All the choices are bad.
Complex problems facing two electrical utilities, their customers and policy makers, one in eastern Kentucky, one in western Kentucky, illustrate that.
Kentucky Power Company’s Big Sandy Plant in Louisa faces a federal consent decree to reduce carbon emissions or shut down by mid-2015. KPC is looking for ways to continue serving 170,000 customers in 20 counties at reasonable costs while complying with air quality rules.
No matter what the Public Service Commission permits KPC to do ratepayers will pay more. The company says it can limit increases by closing one Big Sandy unit and converting the other to gas while acquiring half-interest in a West Virginia facility. That will “limit” the immediate rate increase to 14 percent, according to company officials.
But it will cost 150 local jobs and $900,000 in property taxes for Lawrence County and the county school district. The plant will also stop purchasing 2.5 million tons of coal, another blow to the region’s coal-dependent economy.
Lawrence County Attorney Mike Hogan says if the deal goes through “Lawrence County will cease to exist as it is today.” Rep. Rocky Adkins, D-Sandy Hook, says it will devastate lives “of real people” and drive another “stake into the heart of coal.”
KPC says a more expensive option to keep the coal-fired units operating – installing scrubbers (the West Virginia plant already has scrubbers) – will drive up rates by more than 30 percent.
The western Kentucky example involves Big Rivers Electric Corporation and aluminum smelters in Hancock and Webster counties. Big Rivers also serves three member co-ops, which supply power to 112,000 customers in 22 counties. (Disclosure: my former father-in-law built Big Rivers and recruited those smelters to western Kentucky and my former brother-in-law is attorney for the utility.)
The aluminum smelters require massive amounts of electricity. They came to western Kentucky decades ago because Big Rivers built generating units exclusively to provide them reliable, affordable power. In turn, the region got lots of high-paying jobs. For decades, the smelters and the entire region benefited enormously from Big Rivers’ economic development.
Now the smelters want out. They can buy electricity on the open market at (perhaps temporarily) depressed prices for less than they pay Big Rivers.
Century Aluminum said without the “unwind” from Big Rivers it would close the smelters, eliminating 1,150 high-paying jobs critical to the regional economy. But without the smelters, Big Rivers will lose 60 percent of its revenues and wants to increase rates on residential customers by around 19 percent to offset that loss.
Big Rivers will also close the Wilson and Coleman generating plants, which together employ about 190 people and burn 3 million tons of coal annually, slightly more than at Big Sandy. But because of the aluminum jobs at risk, the case didn’t attract lawmakers and other officials begging the PSC not to approve the agreement.
The utilities’ dilemma is emblematic of Kentucky’s own as it confronts inexorable change that affects its historic dependence on coal, manufacturing and cheap electricity.
Energy and Environment Secretary Len Peters is no enemy of coal. But this week he told some lawmakers what they desperately don’t want to hear: the era of near total dependence on coal-fired, cheap energy is coming to an end and scientific evidence of climate change is “overwhelming.”
There are no good or easy answers. Denying it exists will only make the problem worse and delay the inevitable. We had better be thinking about the future rather than living in the past.
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at firstname.lastname@example.org. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort
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