Kentucky utility settles in environmental compliance case

Kentucky utility settles in environmental compliance case

The Kentucky Public Service Commission announced on October 1, 2012, that it had accepted the terms of a settlement over a proposed environmental compliance plan and all of the associated surcharges that had been filed by the Big Rivers Electric Corp., according to the Lane Reports.

The media outlet stated that the settlement specified that Big Rivers will no longer build the emission control projects that would have required the most spending, which were proposed in the original emissions control plans. By eliminating these controls, the total cost will fall by about 80 percent. The new plan will cost the utility $58.5 million, substantially lower than the first proposal Big Rivers made, which was $225 million higher.

This will have a direct result on utility customers' rates, which will now have lower environmental compliance costs. The changes to the environmental plan came after the federal court overruled a select few of the U.S. Environmental Protection Agency's (EPA's) rules. The projects that were eliminated from the plan were only inserted to comply with these standards that were dropped.

However, the federal court still ordered the EPA to draft new regulations that would ensure the same forms of emissions would be highly regulated. When these new regulations are written and implemented, utilities like Big Rivers may still need to put emissions control systems in place to remain in compliance. The court handed down the decision with no time to spare, only one day before the KPSC was slated to hold a formal evidentiary hearing on Big Rivers' application. The hearing, however, was put on hold to allow the two parties to reach a settlement.

According to the news source, Big Rivers' first proposal included the construction of new pollution control systems at its power generation plants in Hawesville, Centertown and Sebree. In the first proposal, almost half of the total spend was going to be put toward a system called a scrubber in the industry. The utility also hoped to use the funds to convert its Reid plant into a natural gas-burning facility, instead of coal, its current power source. This project would cost about $1.2 million.

By dropping the two most costly maintenance projects – the $139 million installation of the scrubber at its Wilson plant and installing an $81 million nitrogen oxide control system at its Green facility – the utility shaved nearly half of the total cost of the project. Doing so also opened up funds to keep up with mercury and soot control measures at its Coleman, Wilson and Green plants.

Staying current with EPA rules and regulations can lead to much lower maintenance costs associated with required emissions controls. 

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