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PPL Corp. utilities eye retirement of three Kentucky coal units, seek replacement power

Highlights

Units being retired total 1,009 MW

RFP seeks 300-900 MW in 2025 to 2028

New York — Louisville Gas and Electric Co. and Kentucky Utilities Co. are seeking generation capacity to meet a potential energy shortfall being created by the expected retirement of three coal units by 2028.

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The PPL Corp. subsidiaries expect to retire units 1 and 2 at the Mill Creek plant in Jefferson County, Ky., and unit 3 at the E.W. Brown plant in Mercer County, Ky., as the units near the end of their economic lives. In preparation, the utilities on Jan. 7 issued a request for proposals to allow for the evaluation of options to meet customers' energy needs in the future.

The first expected retirement is Mill Creek unit 1 in 2024. According to S&P Global Market Intelligence data, the unit started operating in 1972 and has a summer net capacity of 300 MW. Mill Creek unit 2, which came online in 1974 and has a summer net capacity of 297 MW, is expected to close by 2028.

The LG&E-owned plant has two other units that started operating in 1978 and 1982. Its largest source of coal in 2020, according to Market Intelligence data, was ACNR Holdings Inc.'s Pride mine in Muhlenberg County, Ky., though it also received coal from another half-dozen sources.

Also expected to close by 2028 is Brown unit 3, the last operating unit at the plant owned by Kentucky Utilities. The unit has a summer net capacity of 412 MW and came online in 1971, Market Intelligence data shows. Kentucky Utilities retired the other two units at the plant in February 2019. The plant's coal in 2020 came from Peabody Energy Corp.'s Wild Boar Mine in Warrick County, Ind.

David Sinclair, LG&E and KU's vice president of energy supply and analysis, said while the units have allowed the utilities to deliver safe, reliable power for decades, they are nearing the end of their life cycles.

"Keeping them operating would require costly investments, and given their age, it would not be in the best interest of our customers to further invest in these units," he said in a Jan. 7 statement. "The request for proposal will allow us the opportunity to evaluate a number of options to ensure that we continue to serve our customers' energy needs in the most reliable, least-cost fashion without committing LG&E and KU to any particular business decision."

Resources sought beginning in 2025

Through the RFP issued the same day, the utilities are seeking 300 MW to 900 MW beginning in 2025 to 2028. Proposals must be for at least 100 MW and must be delivered to the utilities' transmission system. The utilities are also asking for proposals for at least 100 MW of battery storage on their system.

"The companies will consider proposals that are reliable, feasible, and represent the least-cost means of meeting our customers' capacity and energy needs," the RFP said. "The companies' analysis will include costs for transmission service, transmission upgrades (if any), and voltage support within the LGE/KU balancing authority footprint and an assessment of the ability of each proposal to be delivered in a timely manner consistent with the companies' capacity and energy needs."

All proposals are due by 4 p.m. EDT March 31. LG&E and Kentucky Utilities said they anticipate making a decision by the middle of the year and possibly seeking applicable regulatory approvals starting in early 2022.

Coal remains a dominant power source in Kentucky. However, a number of solar projects have been proposed in the state over the last year, several of which are to supply corporate customers.

The request does not specify a fuel source for the resources. The utilities will accept proposals "including cost-effective firm peaking (including storage), intermittent non-firm renewable (with or without storage), and/or firm dispatchable baseload and load-following capacity and energy."