A Louisville, KY-based developer is one step closer to moving forward with plans to build the state's second natural gas combined-cycle (NGCC) power plant after a municipally owned electric and water utility last week agreed to explore power purchase agreements (PPA) with the facility.

The Owensboro Municipal Utilities (OMU) board approved entering into discussions that would allow it to learn more about the project and the possibility of eventually buying power from the facility. OMU formed an interest group with five nonprofit utilities from five states to discuss the PPAs. Louisville-based Erora Group subsidiary Henderson Energy has been searching for customers for its proposed 778 MW HenderSun Energy Center.

The facility, to be on a 2,050-acre site along the Green River in Western Kentucky's Henderson County, needs customer commitments before developers move forward. The OMU's decision is not a guarantee it would buy power from the facility, but it demonstrates an increasing interest in gas-fired power in coal-hungry Kentucky.

OMU serves about 50,000 electric and water customers in nearby Daviess County and is the state's largest municipally owned utility. Last year it announced it would close the Elmer Smith Station Unit 1 coal-fired plant in 2019 and expects to close a second unit at the site in the coming years. OMU is also considering converting its remaining Elmer Smith unit to gas.

Kentucky lags its neighbors to the north in Pennsylvania and Ohio, where increasing shale gas production has led to a proliferation of natural gas-fired power plants that are either being built or are planned (see Daily GPIMay 19May 13).

OMU management is expecting all the interested parties to commit to the interest group by the end of June. If that happens, PPA negotiations would begin with the developer in July, with the goal of signing the PPAs by the end of the year.

The Green River site was slated about a decade ago for a coal gasification power plant but those plans never materialized. Kentucky's first NGCC plant was placed into service last year.