balancing the scales, June 10, 2013

New Energy and Transition Update

Page 7

Big Sandy coal burning plant to close; AEP requests rate hike

In order to comply with new clean air standards by 2015, American Electric Power/ Kentucky Power has submitted a request to the Kentucky Public Service Commission to shut down its coal-burning Big Sandy power plant near Louisa. Originally, AEP had requested to retrofit the Big Sandy plant with pollution controls at a cost of nearly $1 billion in order to keep burning coal at that location. The utility withdrew that request in May. Now, the proposal on which the Public Service Commission is taking comments is to shut down the Big Sandy plant and spend $536 million to buy a 50 percent share in a coal-burning power plant in West Virginia. This is estimated to raise utility bills by 8 percent. In May, the PSC held public meetings in Louisa, Hazard and Whitesburg to gather comments on Kentucky Power’s proposal. KFTC members in these communities used the hearings to ask questions, share concerns and project a vision for better long-term investment. Elizabeth Sanders of Letcher County spoke at the Whitesburg meeting: “AEP/ Kentucky Power should be forward looking. The choices you and Kentucky Power make will affect our southeast Kentucky not just today, not just tomorrow, but years and years down the road. That’s why I choose to be here today.” Ada Smith of Mayking and Mimi Pickering of Whitesburg asked important questions of the PSC to clarify the proposal and what it could mean for their electric bills and future rate increases. Through these questions, it became clear that AEP has not yet made a proposal for clean up and shut down of the Big Sandy plant, which will be an additional cost to ratepayers. The PSC also confirmed that since AEP already owns the Mitchell plant

in West Virginia, it is essentially asking ratepayers to pay for AEP to sell the plant to itself, since Kentucky Power is an AEP subsidiary. After the PSC shared a presentation about AEP’s proposal and the process to approve such proposals, Ada Smith reacted to a component of the process called a Certificate of Public Convenience and Necessity (CPCN), a set of PSC requirements including demand-reduction measures. “As a Kentucky Power and AEP customer, I’ve seen no efforts by the company to reduce demand. If they have claimed to do this, I don’t know how they are letting customers know about it,” Smith said. “An 8 percent increase is still outrageous when there are better options out there,” Sanders added. “This is not a reasonable price for customers. These rates are neither fair nor just given that this is not the least-cost option.” The coordinator of a local home repair ministry, Fern Nafziger of Hindman, shared concerns based on her work “to provide warm, safe and dry housing for low-income, elderly and others with needs in the surrounding communities.” Her message of possibility, opportunity and commitment to community resonated in many of the public comments to the PSC. “We all deserve the right to be able to afford basic needs like paying our power bills. I am speaking today for my work and community, because I believe we can make the right choices to provide a brighter future for all people living in substandard housing. “Instead of suffering as American Electric Power continues to increase our rates and move jobs to another state, the Public Service Commission should demand that we make changes here in our communities to transition

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to a better way of life and a higher standard of living. We could meet AEP’s energy demands and meet our own needs by building new and renovating existing homes to be more energy efficient.

AEP has the opportunity to provide job training and help their laid-off plant employees transition to new careers in building construction and as building analysts, ensuring that the energy efficient building practices are adopted in our communities. This investment could apply to developing a least-cost reasonable option for the Public Service Commission.” Fern Nafziger, Hindman There have been new developments in this case since these public hearings at which KFTC members spoke. Since then, Kentucky Power, the Kentucky Industrial Utility Customers (KIUC) and the Sierra Club submitted a memorandum of understanding to the Public Service Commission with a proposed settlement in the case.

The Sierra Club and KIUC agreed not to block Kentucky Power’s request to transfer their power-generation from the Big Sandy plant in Louisa to a 50 percent share in the Mitchell power plant. In addition Kentucky Power agreed to increase its spending on energy efficiency programs, to submit a non-binding request for wind power in the next Integrated Resource Plan it puts before the PSC, and to spend $100,000 on economic development in Lawrence and surrounding counties for five years. A third of those funds are to go to job training. The Kentucky Attorney General’s office declined to be a part of this settlement, and it is still awaiting a response from the Public Service Commission. The PSC must approve the agreement for it to take place. The PSC has extended its deadline and is now taking public comments until July 10. KFTC members are encouraged to let the PSC know that eastern Kentuckians deserve a bright future and a just transition.

Holding AEP accountable For decades American Electric Power has made enormous profit from the hard work, the people, the infrastructure and the public health of our communities and region. As AEP is looking to transition to producing electricity in less harmful ways, the corporation has a moral obligation to the region to invest in good jobs that will increase public health and make our communities stronger. The Public Service Commission needs to know that AEP can: • Create good, local jobs as well as meet its energy demands and our energy needs through local and regional energy efficiency and renewable energy projects. Investment in energy efficiency programs for ratepayers would be the lowest cost option for communities. • Develop land remediation programs and jobs in the eastern Kentucky region. AEP can hire local workers to clean up the site at the Big Sandy plant once it is decommissioned. AEP can hire and train workers to improve abandoned mine lands in the area where the coal was mined that supplied the plant for decades. • Provide job training and transition for laid-off plant employees. AEP owes it to the workers at the plant and the community to provide good benefits and job training. • Develop a community fund or foundation that will pay to create jobs in the region. The Public Service Commission needs to look into requiring AEP to use the sulfur dioxide pollution credits it will save with the closure of the power plant to invest in the community, rather than benefit shareholders. Visit kftc.org/renew-big-sandy to learn more about this issue and points you can make to the Public Service Commission. You may send comments to the PSC before July 10 to P.O. Box 615, Frankfort, KY 40602 or email them to psc.info@ky.gov. Please put the case number 201200578 in the subject line. For questions or more information, contact KFTC organizer Sara Pennington at sara@kftc.org or 606-276-9933.