Kentucky Power seeks approval of biomass power purchase agreement

By Kentucky Power Co. | April 12, 2013

Kentucky Power Co., an operating unit of American Electric Power, has filed an application with the Kentucky Public Service Commission asking for approvals related to a renewable energy purchase agreement (REPA) for biomass energy resources between Kentucky Power and ecoPower Generation-Hazard LLC. The REPA would be for a 20-year period to purchase up to approximately 58 megawatts of electricity from a biomass power generating facility ecoPower plans to construct in Perry County and expects to be operational in 2017.

According to ecoPower, the facility will be located approximately 10 miles northwest of Hazard on 125 acres of a reclaimed coal mine in the Coal Fields Regional Industrial Park. The plant will produce electricity using biomass materials including sawdust, bark, wood chips, tip wood and low-quality logs. ecoPower anticipates the plant could add up to 30 full-time jobs to the local economy and hundreds of ancillary jobs in the construction, timber and trucking industries. Kentucky Power will play no role in constructing, operating, maintaining or owning the facility.

Although any rate increase related to this agreement would not become effective until approved by the commission and when the facility becomes operational, Kentucky Power estimates a rate impact on customers of about 7 percent. However, the actual increase will not be known until the plant begins commercial operation. Kentucky Power may terminate the agreement if the requested approvals are not obtained.

In its application, Kentucky Power states the REPA would allow it an opportunity to satisfy a portion of its customers’ energy needs through a Kentucky-based, renewable-energy facility, which would help the company diversify its fuel use while fostering economic development in Eastern Kentucky. The REPA is also consistent with Strategy Two of Gov. Steve Beshear’s November 2008 “Intelligent Choices for Kentucky’s Future” Energy Plan.

The company has asked the Commission to render a decision on the application no later than Sept. 9, 2013.

Kentucky Power is an operating unit of American Electric Power and provides electricity to approximately 173,000 customers in all or parts of 20 Eastern Kentucky counties. The company is headquartered in Frankfort and has major operating facilities in Ashland, Hazard, Louisa and Pikeville.

 American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.