Citing decreased demand for electricity caused by the poor economy, East Kentucky Power Cooperative (EKPC) has canceled plans for a proposed coal-fueled electric generating unit in Clark County.
“This is a prudent business decision based on the conditions that exist today and our projections of future conditions,” said Tony Campbell, president and CEO of EKPC. “Our analysis indicates that proceeding with construction of Smith Unit #1 at this time is not in the best interests of our cooperative or our members.”
The decision also puts to rest concerns voiced by several environmental groups that were opposed to the project, including the Kentucky Environmental Foundation, Kentuckians for the Commonwealth and the Sierra Club. EKPC has agreed to partner with the environmental groups to establish a collaborative working group to study the deployment of renewable energy resources and demand-side management programs.
While the co-op will save the projected $819 million cost of building Smith Unit #1, EKPC has already spent approximately $150 million on structural steel and other materials for the unit. EKPC is requesting permission from the Kentucky Public Service Commission to establish a regulatory asset to recover those costs through rates over a 10-year period.
“Almost all of those costs were incurred several years ago when the economy was roaring and construction costs were rising rapidly,” said Mike McNalley, EKPC’s chief financial officer. “It made sense to go ahead and invest in materials in order to protect against much higher prices later.”
EKPC is a not-for-profit organization providing wholesale electricity to 16 distribution cooperatives that serve 87 counties