New EPA rules prompt E.ON's Kentucky utilities to seek to retire 800 MW of coal-fired capacity, propose building 640-MW natural gas-fired plant in Louisville, buying natural gas-fired turbines in LaGrange totaling 495 MW

LOS ANGELES , September 19, 2011 (press release) – Louisville Gas and Electric Co. (LG&E) and Kentucky Utilities Co. (KU) propose expanding their natural gas-fired power capacity by 1,135 megawatts (MW) while closing down three coal-fired plants totaling nearly 800 MW of capacity, reported Reuters on Sept. 16.

The shift to natural gas from coal is a “lower-cost option,” said Paul Thompson, senior VP at LG&E and KU, in a press release on Thursday.

LG&E and KU operate under PPC Corp., an Allentown, Pennsylvania-based holding company owned by LG&E and KU Energy LLC and Subsidiaries, which was formerly E.ON U.S. LLC and Subsidiaries, according to the company’s website.

The companies have filed for state permits to build a 640-MW natural gas-fired, combined cycle power plant at the existing Cane Run coal-fired power plant in Louisville, Reuters reported.

In addition, they are seeking approval from Kentucky regulators to acquire three natural gas-fired turbines totally 495 MW of capacity from Bluegrass Generation Co. LLC in LaGrange, Kentucky.

In earlier filings, LG&E and KU proposed retiring their 563-MW Cane Run, 71-MW Tyrone and 163-MW Green River coal-fired power plants, which were started up between 1953 and 1969, reported Reuters.

New federal rules are forcing the closures while making it necessary to expand lower-emissions capacity, install additional emissions controls and do various upgrades at some of their other coal-fired power plants by 2016.

The capital investment will be US$800 million for the new natural-gas generators, including about $110 million to buy the Bluegrass facility, Reuters reported.

By the end of 2019, LG&E and KU estimate expenditures totaling as much as $4 billion to comply with new federal emission standards from the U.S. Environmental Protection Agency, with over $3 billion of that being spent by the end of 2016.

After the coal-fired plants are closed and the combined-cycle plant begins operating in 2016, LG&E and KU will generate 90% of their power using coal, compared with 97% now, the companies said.

LG&E and KU said that they will seek to recover their costs from customers in future rate filings.

Due to widespread use of low-cost, coal-fired power, the average residential ratepayer in Kentucky pays $0.065 per kilowatt hour compared with the U.S. average of $0.098/kWh, according to federal data, reported Reuters.

The primary source of this article is Reuters, London, England, on Sept. 16, 2011.

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