Kentucky regulators approve some coal retirements, defer others
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Kentucky regulators approve some coal retirements, defer others

PPL Corporation subsidiaries Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU) received regulatory approval to retire 600 MW of aging coal generation and more than 50 MW of aging natural gas units by 2027 and replace them with cleaner sources.

The Kentucky Public Service Commission (KPSC) order allows LG&E and KU to build an approximately 640 MW combined-cycle plant at its Mill Creek facility, add 240 MW of company-owned solar, secure power purchase agreements for nearly 650 MW of additional solar, construct 125 MW of battery storage and implement more than a dozen new energy efficiency programs.

Regulators did not approve all of the coal retirements sought by LG&E and KU, however. The 600 MW approved for retirement represent Mill Creek coal-fired Units 1 and 2, which went into service in 1972 and 1974, respectively. The state’s public service commission deferred LG&E/KU’s proposed retirement of the larger coal-fired Ghent Unit 2 and Brown Unit 3.

Electric utilities in Kentucky are now required to receive approval from state regulators if they want to retire fossil-fired generating units. The new requirement stems from a state law passed earlier in 2023.

LG&E/KU hoped to retire Mill Creek 1 by 2024, Mill Creek 2 by 2027, Ghent 2 by 2028 and Brown 3 in 2028.

LG&E/KU had argued that proposed amendments to the U. S. Environmental Protection Agency’s (EPA) Good Neighbor Plan, if enacted, would effectively require non-SCR (Selective Catalytic Reduction) equipped coal units to cease operating or operate only at very minimal levels during each year’s ozone season beginning in 2026.

Mill Creek 1, Mill Creek 2 and Ghent 2 are not currently equipped with SCR. LG&E/KU argued operating Mill Creek 1 beyond 2024 would require [Effluent Limitations Guidelines] retrofits, while operation beyond 2027 would require a cooling tower, and operation beyond 2027 in ozone season would require the addition of an SCR due to the Good Neighbor Plan.

LG&E/KU argued that it was also economical to retire Mill Creek 2 and Ghent 2 rather than equipping them with SCR or operating the plants only outside of the ozone season.

LG&E/KU proposed retiring Brown 3, citing $26 million in major maintenance required in 2027. LG&E/KU argued this work would not be cost-effective “given the overall inefficiency of the unit.”

But the commission’s decision reflected a cautious approach. KPSC said by not making so many generation decisions on a “single, contentious load forecast” it hoped to mitigate the risk of overbuilding to the detriment of customers’ rates or underbuilding to the detriment of Kentucky’s energy adequacy.

The commission argued there was not as immediate a need to take action on Ghent 2 and Brown 3, but expects the status of those units to come up again soon when LG&E/KU have a better idea of what the EPA emission rules will look like and when they will be implemented. The Good Neighbor plan is currently stayed in Kentucky while circuit judges proceed with litigation.

“The Commission believes that it would be possible for LG&E/KU to reliably serve load with Ghent 2 and Brown 3 while they wait for more certainty with respect to the Good Neighbor Plan and other environmental regulations,” the order reads.

KPSC also denied the companies’ request to build a second combined-cycle gas plant at this time, finding that construction of a second unit should be deferred to provide for an in-service date in 2030, rather than 2028 as the companies had proposed.

Retirements of Ghent Unit 2 and Brown Unit 3, as well as construction of a second combined-cycle gas plant, would require future commission approval.

PPL said the level of expected investment is consistent with the originally proposed generation replacement plan, which projected $2.1 billion of investment overall, including $1.6 billion through 2026.

The expected investment includes additional costs related to the construction of the approved combined-cycle natural gas plant and investments needed to continue to safely operate and maintain Ghent Unit 2 and Brown Unit 3 and comply with environmental regulations.

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