The Kentucky Public Service Commission last week approved Kentucky Power’s plan to maintain its ownership of the Mitchell plant in West Virginia.
In its 68-page order, though, the commission said Kentucky Power had fumbled its options
and gave regulators no choice but to approve the proposal “to prevent a worse outcome.”
The commission had rejected a similar plan in 2021. Demand for electricity has risen since then, and so has the cost of coal generation.
Kentucky Power customers are facing a potential 15% rate increase in a separate case the PSC will hear this month.
At two public hearings so far, residents have spoken uniformly in opposition to the increase.
A third public hearing will take place on Thursday in Ashland, followed by an evidentiary hearing in Frankfort on Jan. 13.
The commission urged Kentucky Power to consider converting Mitchell to 100% natural gas. A Sierra Club witness testified that would be cheaper than continuing to burn coal.
Keeping the Mitchell plant online will cost Kentucky Power customers an average of $2 a month. The rate increase, if approved as submitted, would raise average bills by $27.
The Kentucky commission chastised Kentucky Power for its decision to partially retire its Big Sandy plant in Lawrence County in 2015. Instead of installing pollution controls on Big Sandy to keep it operating as a coal plant, the company purchased 50% of Mitchell and converted one unit at Big Sandy to operate with gas.
“While those failures do not justify denying the application in this matter for the reasons discussed above, the commission is concerned that this is part of a broader pattern in which Kentucky Power, whether intentionally or not, has made poor resource decisions,” the commissioners wrote.
The company has said, and the Kentucky PSC agreed at the time, that Mitchell was a cheaper option than upgrading Big Sandy.
Ceasing coal generation at Big Sandy, though, was deeply unpopular in the region and among its elected representatives.
While Mitchell currently operates as a coal plant, it is near Moundsville, West Virginia, about 200 miles away. Mitchell burns little coal from Kentucky, employs few Kentucky workers and pays no Kentucky property taxes.
Kentucky Power has said it will need to replace one of Mitchell’s two concrete cooling towers in the next several years. While the company has applied for a federal grant to help offset the cost, it will need to seek permission from regulators in Kentucky and West Virginia to recover much of the expense from electricity customers.
Kentucky’s commission said Kentucky Power could have opted to retire Mitchell in 2028 and seek replacement power. It reluctantly approved the company’s continued ownership of Mitchell, however, because alternatives, including a new natural gas plant or market purchases, are now more expensive or couldn’t be completed in the next few years.
An analysis last year of federal data by Energy Innovation Policy & Technology showed that Mitchell was 55% more costly to operate in 2024 than it was in 2021.
