EPA raises questions about E. Ky. Power plant

In a letter last month to the U.S. Army Corps of Engineers, the federal Environmental Protection Agency raised concerns over East Kentucky Power Cooperative's proposed coal-fired power plant in Clark County.

It's the latest in mounting criticism that has plagued the long-discussed plant, which was effectively placed on hold earlier this year by the cooperative, though leaders say they still intend to go forward and build it after assessing the co-op's finances.

In the letter, which was obtained and released by a number of environmental groups that have long opposed the plant, the EPA objects to the cooperative's proposed coal technology to power the plant and noted other more environmentally friendly options including natural gas.

The EPA's Heinz J. Mueller, chief of the National Environmental Policy Act program office, wrote that other options might cost more than the cooperative's favored coal-fired design, but the "EPA does not believe that the cost differential justifies selection of a power plant design that would generate substantively greater emissions."

Mueller's comments came as part of an environmental study that is being done by the Army Corps of Engineers for the plant, which would provide power for 150,000 homes. The co-op produces power for its 16 member co-ops that in turn service more than 500,000 homes, farms and businesses throughout Central and Eastern Kentucky.

Mueller noted, too, that renewable energy sources such as wind and solar could allow the cooperative to "reduce or even eliminate the need" to build a new power plant for its electric load.

That echoes what environmental groups, including Kentuckians for the Commonwealth, the Kentucky Environmental Foundation and the Sierra Club, have preached for years. They've argued the cooperative, which has struggled to maintain a strong financial condition, would be better off spending money to educate customers about consuming less electricity.

"EPA is right to call out EKPC as failing to justify this expensive, unnecessary coal plant," Lois Kleffman, a customer of EKPC distribution cooperative Jackson Energy, said in a statement. "There are cleaner, better ways to meet energy demands that won't force EKPC to saddle its customers with a billion dollars in debt that they'll be paying off for generations.

"EKPC should stop wasting taxpayers' and ratepayers' dollars and start pursuing cleaner options now."

Cooperative spokesman Nick Comer said the proposed plant is "the most reliable, affordable option" and noted that the state Division for Air Quality has agreed it will meet federal and state air-quality standards.

He also disputed the EPA's assertion about solar and wind power, saying it would not be reliable enough given "sunshine and wind tend to be very intermittent in this part of the U.S."

The EPA also expressed concern that "significant portions of the information relied upon" in a draft version of the environmental impact study is outdated, "sometimes 20 years or older," according to the letter. "For the environmental impacts of the proposal to be adequately evaluated, this information must be updated."

The cooperative effectively delayed the building of the plant earlier this year when it asked the state Public Service Commission to allow it to withdraw its request for approval of private financing for the project. While East Kentucky Power would have obtained the money from banks and other lenders, such action requires the approval of the three-person commission, which regulates utilities in Kentucky.

The cooperative's filing stated only that it thinks financial prudence requires that it reassess its immediate need for financing. Comer said later "it was a business decision" and that the cooperative intends to re-file pending the outcome of the reassessment.

Opponents have seized on the cooperative's financial condition as a reason to stop the costly plant, which at one point was to cost $553 million but now could be as much as $900 million.

The cooperative's position deteriorated so much that it failed in 2006 to meet one of the financial ratios required by its loan covenants. It lost money during 2004 and 2005 and narrowly had a profit in 2006. It has since applied for and received approval for two rate increases and recently filed for another increase, which would raise the average customer's bill by $5 to $6 a month.

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