FRANKFORT, Ky. – A Franklin County Circuit Court ruling has rejected an appeal filed by Kentucky Attorney General Jack Coway seeking to overturn a Kentucky Public Service Commission ruling approving Kentucky Power’s plan to buy part of a West Virginia power plant.
In the order issued April 10, Franklin Circuit Court Judge Thomas D. Wingate said, “The Commission acted within its authority to grant Kentucky Power’s request to acquire a 50 percent interest in the Mitchell Plant. The Commission’s decision was both lawful and reasonable and was supported by substantial evidence.
By acquiring one-half of the Mitchell plant, located in Moundsville, West Virginia, Kentucky Power is able to replace nearly all of the generated power that will be lost when Unit 2 at the company’s Big Sandy Plant in Louisa is shuttered May 31 to comply with EPA requirements. The transfer had a price tag of $536 million, compared to nearly $1 billion to install scrubbers at the Big Sandy plant.
“The AG has failed to meet the burden of demonstrating that the Commission erred in authorizing the acquisition as the least-cost alternative,” the court order said.
Kentucky Power President and COO Greg Pauley welcomed the court’s decision as good news for customers.
“This ruling affirms that we made the most cost-effective choice we could have made for our customers as we work to comply with stricter EPA requirements,” Pauley said. “Had we opted to install scrubbers at Big Sandy, we would have been forced to seek a 31 percent rate increase to fund the equipment needed to meet the new environmental rules.”
The court’s ruling comes as the Kentucky Public Service Commission considers Kentucky Power’s overall rate adjustment request of 12.48 percent. That request seeks about $70 million, including nearly $38 million to complete the Mitchell purchase. The remainder of Kentucky Power’s request seeks funding to increase tree trimming and cover growing costs of doing business. Under the company’s proposal, residential customers using an average 1,362 kilowatt hours per month would see an increase of about $22 a month, or 72 cents a day. The Commission has scheduled a formal hearing in May on the request.
Kentucky Power, with headquarters in Frankfort, Ky., provides service to approximately 172,000 customers in all or part of 20 eastern Kentucky counties. It is a unit of the AEP system, one of the largest electric utilities in the United States, with more than 5 million customers.