Cris Ritchie | Hazard Herald

Kentucky Power President and CEO Greg Pauley spoke before an audience of about 80 people in Hazard Monday morning.

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HAZARD – Officials with Kentucky Power Company were in Hazard on Monday where they discussed the current direction the company is taking with its Big Sandy power plant in Lawrence County, and with coal in general.

Kentucky Power is one of two utilities that utilizes 100 percent coal-fired power plants, noted President and CEO Greg Pauley, though increased federal regulations are likely to change that by spring of next year. That’s when the company plans to shut down its two coal-fired units in Louisa and begin purchasing power off the market.

Kentucky Power had originally planned to upgrade its Big Sandy plant to comply with new federal regulations on the burning of coal to produce electricity, but a near $1 billion price tag would have led to an estimated increase of 30 percent for consumers.

“The bottom line is, you don’t want to pay … an increase of 30 percent; I don’t want you to have to pay a 30 percent increase,” Pauley told an audience during a presentation at Hazard Community and Technical College.

The company in May 2012 retracted its proposal to upgrade the plant, and in December filed a new proposal that would see Kentucky Power purchase electricity from out of state, a move Pauley said could increase rates by up to nine percent, though still well under the 30 percent upgrading the plant may have faced.

Pauley said he looks at this decision as one of economic development, because as a utility company, Kentucky Power can play a significant role in development by keeping rates low. But increasing rates to customers by such a large margin wasn’t a productive step for the region.

“In my opinion, a 30 percent increase was not going to help Eastern Kentucky,” he said.

Kentucky Power’s current proposal filed with the Public Service Commission would see the company purchase a 50 percent stake in Ohio Power Company’s Mitchell power plant, a coal-fired plant located in West Virginia that burns about 30 percent Kentucky coal. That plant is already in compliance with federal regulations, and the power generated there would nearly replace the capacity lost when the company shuts down its Big Sandy plant.

Pauley also touched on what he referred to as a “war on coal” being waged by the federal Environmental Protection Agency and the private Sierra Club, noting their goal is to eradicate the burning of coal in the U.S.

“They don’t want coal to be burned, and they’re going to do everything they can to reduce the consumption of coal to generate electricity,” he said. “And I’ll tell you, they’re doing a pretty good job.”

At one time, he said, the American Electric Company, the parent of Kentucky Power, generated more than 60 percent of its electricity by burning coal. That figure will drop to around 50 percent in order for the company to be in compliance with federal guidelines, he added.

Many utilities are switching from coal to cheaper natural gas, and Pauley said this could even be an option of the smaller of the two generating units at the Big Sandy plant, though nothing has been finalized. For the time being, the company is simply waiting on the Public Service Commission’s ruling on its most recent proposal, and Pauley said his main goal is to supply consumers with power at the lowest possible rate.

The Public Service Commission will hold a public hearing on Wednesday at 5 p.m. at Hazard Community and Technical College’s Hazard campus, at which time officials will take comment on Kentucky Power’s proposal to scuttle its Big Sandy generation plant. A final decision on the proposal is expected later this year.