PSC approves purchase agreement for biomass plant in Perry

Amelia Holliday — Staff Reporter

October 10, 2013

HAZARD—Kentucky’s Public Service Commission (PSC) approved on Thursday an application from Kentucky Power Company for a 20-year Renewable Energy Purchase Agreement (REPA) with ecoPower Generation-Hazard.

The Herald reported earlier this year that Kentucky Power plans to purchase energy from an ecoPower biomass power generating facility that is planned to be built in the Coal Fields Industrial Park in Perry County by 2017. Officials with ecoPower said the plant will use local lumber scraps to produce the energy, and would employ up to 30 full-time workers in the plant itself while supplying the county with hundreds of ancillary jobs in timber, truck driving, and construction.

Ronn Robinson, corporate communications manager for Kentucky Power, explained that the REPA essentially allows the company to purchase energy from the plant if it was to be built.

“What this does is it gives ecoPower a market for the electricity, basically, for lack of a better term. So, now that they have somebody to sell it to they can move forward to build it,” Robinson said.

According to the order, which was filed April 10 and re-filed with amendments in July, even though the REPA would cause an eventual 7 percent rate increase for the 173,000 Kentucky power customers in the area, it would provide many more positive opportunities to those in the 20 counties the company services in Eastern Kentucky.

“Kentucky Power contends that the proposed REPA presents it with a unique opportunity to invest in its service territory, promote economic development, provide for future load growth, and diversify its generation portfolio with a Kentucky-based renewable resource,” the order read.

Perry County Judge-Executive Denny Ray Noble said he could not support this move from Kentucky Power, despite the possibility of jobs being brought to the region.

“Now, we need jobs but we shouldn’t have to buy them. We’ve got a good work force in this area and we don’t need to have to buy jobs,” Noble said. “I’m not for any price raises in electricity.”

Robinson said the increase in rates, which would not be implemented until 2017 if the plant is built, would be necessary to pay for the cost of purchasing the 58 megawatts (MW) of renewable energy the company plans to buy every year from the plant.

“Renewable energy is more (costly). I mean, it is. Whether it’s wind or whether it’s solar or whether it’s—it’s always going to be more than coal,” he said.

The announcement of this future rate increase comes on the heels of an eventual 14 percent increase in rates due to Kentucky Power’s purchase of a 50 percent interest in Ohio Power Company’s Mitchell plant. Robinson said though customers will not see any of these rate increases immediately—with a 5 percent increase coming in January if the plant is purchased and an additional 9 percent increase being spread out over the next few years—customers will just need to ready themselves for the price of electricity.

“Over time, the electricity is going to cost, partly because of the impact—in large part because of the impact of environmental regulations as it relates to burning coal through the EPA. That’s what the transfer of Mitchell’s all about, to find the cheapest way to do that,” he said.