PSC approves cancellation of East Ky. Power plant in Clark County

The state Public Service Commission on Monday approved a request by East Kentucky Power Cooperative to cancel a long-planned plant in Clark County.

The cooperative announced in November that it had reached a settlement with opposition environmental groups to scrap the idea of the coal-fired plant. In return, the groups agreed to drop a number of lawsuits and other legal proceedings.

East Kentucky Power officials also noted that demand for electricity had dropped more than they expected, primarily due to the recession. Because of that, a new plant wouldn't be needed until 2018, according to documents submitted to the PSC.

The cooperative already had spent $157.4 million on the canceled plant. The PSC on Monday agreed to allow the cooperative to eventually recover some of that through a rate increase. However, East Kentucky Power must sell or put to use in its other plants as many of the already purchased materials as possible. Among the materials it will try to sell is the generator itself. The cooperative has estimated it might take up to 18 months to sell or use the materials.

Scrapping plans for the Smith plant will be a major financial savings for East Kentucky Power, which had estimated it would spend $819 million on construction. An analysis by the cooperative suggests the lowest-cost option to meet future demand will be a natural gas-fired plant to be built by 2018 or 2022. If it's not built until 2022, the cooperative would buy power from outside companies in the interim, the PSC noted in a news release. In the meantime, the cooperative is partnering with the environmental groups as part of a group that aims to encourage customers to be more energy-efficient to reduce demand.

East Kentucky Power produces power that is then sold to about 500,000 homes, businesses and farms that are customers of its 16 member cooperatives.

This story was originally published March 1, 2011 at 12:00 AM with the headline "PSC approves cancellation of East Ky. Power plant in Clark County."