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Kentucky Utilities Reverse Course on Proposed Gas-Fired Plant

Eight months after filing a request with the Kentucky Public Service Commission (PSC) to build a $700 million natural gas-fired baseload combined-cycle (NGCC) and solar generation facility, Louisville Gas and Electric Co. (LG&E) and Kentucky Utilities Co. (KU) have withdrawn the NGCC application, saying they will instead pursue a solar-only option.

The decision to withdraw the application for the proposed gas-fired facility in Muhlenberg County "comes as a result of nine municipal utility customers' decision to terminate in 2019 their wholesale power contracts with Kentucky Utilities," the companies said. "Those contracts total approximately 320 MW of peak demand."

The proposal, unveiled by LG&E and KU last year (see Daily GPI, Oct. 7, 2013), included plans for an approximately 700 MW NGCC generating facility in Muhlenberg County and a 10 MW solar photovoltaic facility in Mercer County. The need for the NGCC, which was expected to be completed by 2018 and cost approximately $700 million, was based in part on energy forecasts through 2035 that included serving the municipal customers, the companies said Thursday.

In 2012 the PSC approved plans by the two PPL subsidiaries to build a gas-fired power plant in Jefferson County and to purchase an existing gas-fired plant in Oldham County (see Daily GPI, May 7, 2012). The new plant was considered necessary to replace coal-fired power plants at LG&E's Cane Run, and KU facilities in Muhlenberg and Woodford counties, as well as to meet a projected increase in demand for electricity by 2016.

Following the municipal utilities' termination notices, LG&E and KU in April put the new generation requests on hold to weigh the impacts on future generation plans, and decided to withdraw their application for the NGCC. Plans remain in place for the $36 million solar facility at KU's existing Brown facility. If approved, the solar unit would go online in 2016.

The loss of the nine municipal customers "does not impact service to LG&E and KU's remaining 1.2 million customers, since KU simply supplies electricity to the municipal customers, who in turn provide service to their customers; but it may impact the cost to serve these retail customers in the future," LG&E and KU said in April.

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