Market Forces Drive Another Kentucky Coal Power Plant To Retire

Jun 27, 2018

Credit Erica Peterson

Coal-fired power plants in Kentucky continue closing even as the Trump Administration works through details on how to bail out the industry.

Energy Secretary Rick Perry said Monday he wasn’t ready to provide details of the plan, but even if it was implemented tomorrow, that wouldn’t stop Owensboro, Kentucky from shutting down its coal-fired power plant in 2020.

The city of Owensboro has generated much of its own electricity for more than 100 years, but that will change when the city closes Elmer Smith Station — a coal-fired power plant operating since 1964.

The decision came Friday when the Owensboro Municipal Utility Commission approved a contract with Big Rivers Electric.

“Big Rivers is proud to partner with OMU to supply power. We think it’s for the betterment of the entire region,” said Jennifer Keach, a utility spokeswoman.

Owensboro was already planning to shut down the station — one unit in 2019 and a second in 2023 — but has now set a firm deadline for retirement when the agreement takes effect.

The 2020 closure will affect about 60 plant employees, though Big Rivers said it will consider them for positions at its own power plants.

“That is part of the agreement. They have valuable skills, everyone who works in the power industry knows it’s a specific talent pool that you have to pull from,” Keach said.

The plant is one of two in the region that will likely close in the coming years as market forces drive older, less efficient coal-fired power plants into retirement.

The utility has trouble competing with natural gas prices when selling excess capacity on the open market, said Owensboro Municipal Utility Spokeswoman Sonya Dixon. Maintenance is also driving up costs.

“It’s just as in when you’re car gets older, or any other piece of mechanical equipment, it becomes harder and harder and more expensive to maintain it,” Dixon said.

Thirty miles to the west, the city of Henderson also owns a coal-fired power plant and is considering closing its station, said Chris Heimgartner, the utility manager for Henderson Municipal Power and Light.

Coal plant retirements have less to do with a so-called “war on coal” and more to do with aging power plants that are less efficient and less economically feasible than newer technologies.

“Forget about coal for the moment, if you have an industry that has a fleet of production units that are of uniform age,” Heimgartner said. “You would expect overtime to retire the older plants and bring new sources online.”

So while Owensboro will continue to purchase coal power from Big Rivers through 2026, it will also pursue a separate agreement to purchase solar power — a more resilient energy mix that’s also more reflective of today’s economy.

This story has been updated.