For an industry still reeling from rounds of layoffs, weak financial reports and an uncertain future, last week’s announcement that Kentucky Power plans to stop burning coal at its Big Sandy Power Plant, in Louisa, comes as unwelcome news for coal operators.
Bill Bissett, president of the Kentucky Coal Association, said Thursday that, while it is too early to tell just what impact the plant’s closure will have on coal mining, industry insiders had already been “very concerned” about the future of Big Sandy. Still, they were aware that stopping coal burning at the plant was a distinct possibility.
“This is very concerning news, but not a major surprise,” Bissett said.
The Big Sandy plant currently burns 2 million tons of coal a year. That demand on the local coal economy would disappear, if the plan to shut down the plant’s 800-megawatt No. 2 generator is approved by the state Public Service Commission. The company would instead obtain its electricity for the region by acquiring a 50 percent stake in a Moundsville, W.Va., plant.
The plant’s older, 276-megawatt No. 1 generator is already slated to stop burning coal in 2015, but company officials say it is uncertain how Kentucky Power will replace its generation capability. The company will seek proposals next year for replacing the generator’s production and could also consider converting it to natural gas.
But Bissett said the current trend away from coal and toward natural gas is extremely short-sighted. He said he believes with certainty that natural gas prices will soon undergo a dramatic rise.
“What is inexpensive today may not be tomorrow,” Bissett said.
Bissett says there are other reasons for concern, “from what we’re seeing in the coal market and a second term for President Obama.”
“We’re a country that is going to use more electricity in the future, and we’re not building power plants, of any kind,” Bissett said.
Bissett said it would be difficult to say what impact the closure will have on Kentucky coal miners, because there is no good way to determine how much of an impact the plant currently has on local coal production or what markets might be available to offset the plant’s loss. He said coal producers are seeing increasing demand for Kentucky coal overseas, and that demand might counter declining demand at home.
“International demand looks very attractive,” Bissett said.