Home » PSC sets public meetings in Big Rivers Electric environmental compliance case

PSC sets public meetings in Big Rivers Electric environmental compliance case

Comments taken in Paducah and Henderson

FRANKFORT, Ky. (July 30, 2012) – The Kentucky Public Service Commission (PSC) will conduct public meetings next month in Paducah and Henderson to receive public comments on an environmental compliance plan and associated environmental surcharge request submitted by Big Rivers Electric Corp.

The public comment meetings will be preceded by an information session during which PSC staff will explain the environmental compliance review process and the legal basis for the surcharge. The presentation will include an overview of the Big Rivers application.

The meetings are scheduled for:

Paducah – Monday, Aug. 13, 2012
Information session at 5:30 p.m. CDT, public comment session at 6:30 p.m. CDT
Room 109, Emerging Technology Center
West Kentucky Community and Technical College
4810 Alben Barkley Drive


Henderson – Tuesday, Aug. 14, 2012
Information session at 1 p.m. CDT, public comment session at 2 p.m. CDT
Stagg Meeting Room, Henderson Fine Arts Center
Henderson Community College
2660 S. Green St. (US Highway 60)

“These meetings are an opportunity for the public to learn more about an issue that affects every electric utility in Kentucky,” said PSC Chairman David Armstrong. “The meetings also allow the PSC to hear directly from ratepayers before it reaches a decision.”

A decision is due in early October, at the end of the six months allowed by Kentucky statute for the PSC to complete its consideration in such cases.

Big Rivers is owned by and provides wholesale power to three rural electric distribution cooperatives: Jackson Purchase Energy Corp., Kenergy Corp. and Meade County Rural Electric Cooperative Corp. Together, the three cooperatives serve 112,000 customers in 22 counties in western Kentucky.

Big Rivers is seeking PSC authorization to spend about $283.5 million to comply with new federal environmental requirements affecting utilities that burn coal to generate electricity. Residential and commercial customers and all but the 22 largest industrial customers would not see their bills increase until about 2018, the company says. Total bills for the 22 largest industrial customers would increase in 2016 by amounts ranging from 7.3 percent to 8.5 percent, according to the Big Rivers application.

Although the environmental compliance costs would begin to be assessed in 2016, when the pollution control facilities go into operation, all but the 22 largest industrial customers would be insulated from any increases for about two years, Big Rivers states in its application. That is because of an agreement reached in 2009 that ended a contract under which the Big Rivers power plants were operated by a subsidiary of E.ON-US.

The agreement, known as the “unwind,” created two funds that would be used to reduce electric bills for all but the two largest customers in the Big Rivers system. Without the environmental costs, the funds were projected to be exhausted in about 2019, Big Rivers states in its application. The additional costs will cause the funds to run out about a year earlier, the utility says.

Absent the funds established by the unwind agreement, bills in 2016 for residential and commercial customers and all but the 22 largest industrial customers would be 7.8 percent higher than they are now, while bills for the 22 largest industrial customers would be 6.9 percent to 7.3 percent higher than today, Big Rivers states in its application.

Since 1994, Kentucky laws and regulations have allowed utilities such as Big Rivers to recover environmental compliance costs separately from their general rates. The costs are recovered through a surcharge that appears as a separate item on electric bills. Generation and transmission cooperatives such as Big Rivers pass the costs through to distribution cooperatives, who in turn pass them through to retail customers.

The Kentucky law under which the application is being considered – known as the environmental surcharge mechanism – gives the PSC more limited review and discretion than it has in general rate cases.

The information sessions will last an hour and will include a presentation by PSC staff and a question-and-answer period focusing on the PSC process.

For those unable to attend, the presentation will be available on the PSC website, psc.ky.gov, beginning Aug. 13.

The $283.5 million Big Rivers is proposing to spend would pay for the construction of new or upgraded pollution control systems at its power plants in Hawesville (Coleman plant), Centertown (Wilson plant) and Sebree (Green and Reid plants). Nearly half the money would be spent to construct a system commonly known as a scrubber, as well as associated facilities, at the Wilson plant. About $4.1 million would be for Big Rivers’ share of the cost of scrubber improvements at the Henderson Municipal Power & Light Station Two in Sebree, which is operated by Big Rivers.

Big Rivers also proposes to complete the conversion of the Reid plant to burn natural gas instead of coal, a project that would cost $1.2 million.

The application of Big Rivers and related documents are available on the PSC Web site, psc.ky.gov. The case number is 2012-00063.

In addition to the public meetings, the PSC will conduct a formal evidentiary hearing in the case beginning at 10 a.m. on Wednesday, Aug. 22. The hearing will be held at the PSC offices at 211 Sower Blvd. in Frankfort. It will be open to the public and may be viewed live on the PSC website.

Written comments will be accepted through the conclusion of the evidentiary hearing. They may be mailed to the PSC at P.O. Box 615, Frankfort, KY 40602, faxed to 502-564-9625, e-mailed from the PSC website or submitted in person at the public meetings or at the PSC offices.

The PSC is an independent agency attached for administrative purposes to the Energy and Environment Cabinet. It regulates more than 1,500 gas, water, sewer, electric and telecommunication utilities operating in Kentucky and has approximately 90 employees.