Kentucky Power and East Kentucky Power Cooperative will receive $51 million and $90 million, respectively, for projects at three coal-burning plants.
Kentucky Power and Wheeling Power jointly own the Mitchell plant in West Virginia. It needs a new cooling tower, and the federal grant will go toward the $191 million cost.
East Kentucky Power Cooperative will use its funds to extend the lives of its Spurlock and Cooper plants in Mason and Pulaski counties.
The company intends to co-fire units at both plants on either coal or natural gas.
The Trump administration has made hundreds of millions of dollars available to keep coal plants on the grid longer. Coal has been losing ground for more than a decade to natural gas and renewables.
Seth Feaster, an energy analyst with the Institute for Energy Economics and Financial Analysis, said Mitchell is an old plant and has a hard time competing.
“You're not getting a new coal plant,” he said. “You're not getting a cheaper coal plant out of it.”
Kentucky Power spokeswoman Sarah Lynch said the federal funding will help reduce the amount that will be recovered from electricity customers, subject to approval by state regulators.
“Kentucky Power customers will benefit from one half of the grant award, which translates to 50% of $51million, or $25.5 million,” she said. “The total cost of the cooling tower replacement is expected to be $191 million, meaning the cost for Kentucky goes from $95.5 million to $70 million which is a significant reduction for customers.”
Feaster said coal plants are slow to start up, and enabling them to use gas helps them compete better. East Kentucky Power is one of many utility companies to enable their plants to co-fire.
“That's because it takes forever to start up a coal plant and if you can run it on gas to some extent,” he said, “then you're going to have a lot more flexibility about that.”
East Kentucky Power spokesman Nick Comer said the funding “will defray the cost of projects to enhance resilience and flexibility at two of EKPC’s baseload coal plants and ensure the continued reliability of electric service for 1.2 million Kentucky residents and thousands of businesses.”
Both companies are planning to build new gas generation. One of East Kentucky Power’s new gas plants will be right next to the existing Cooper coal plant in Burnside.
On Thursday, the Kentucky Energy Planning and Inventory Commission reported that the electricity demand from proposed data centers exceeds what the state currently generates.
