Big Rivers to idle 2 Kentucky coal power plants as smelters end deals

Thu Jan 23, 2014 3:47pm EST

Jan 23 (Reuters) - Big Rivers Electric Corp said Thursday it would idle two coal-fired power plants in Kentucky due to the loss of power sales contracts with two of Century Aluminum Co's aluminum smelters in the state.

Big Rivers, a generation and transmission co-operative, said it would idle the one unit 417-megawatt Wilson plant in Ohio County in February and the three unit 443-MW Coleman plant in Hancock County as late as June. Both are in northwest Kentucky.

Marty Littrel, a spokesman for Big Rivers, said the company was looking to idle the plants, not retire them.

"This is a temporary thing. We have some of the lowest-cost power in the country and have made proposals to sell electricity to several other companies," Littrel said, noting the plants could sell power anywhere in the Eastern Interconnection, which covers much of the eastern two-thirds of North America.

He could not say when the plants would return to service.

Big Rivers said its average industrial rate is 4.6 cents per kilowatt hour. That is well below the 2013 national average industrial rate of 6.8 cents, according to federal data.

Littrel said Big Rivers had a contract to supply power to Century's smelter in Hawesville until August 2013, and has a contract to supply Century's smelter in Sebree until Jan. 31.

Century, majority owned by Swiss commodities, metals and mining company Glencore Xstrata PLC, said it ended the Big Rivers power supply deals to lower operating costs. Energy accounts for a third of smelters' production cost.

Relatively cheap natural gas prices from record shale production have reduced power prices in recent years.

Century said the Hawesville smelter has been buying power from the market since August last year.

Century said it hopes to do the same with Sebree when its Big Rivers contract expires at the end of this month, subject to approval by Kentucky's energy regulator.

Combined, the two smelters use about 850 MW of power, Littrel said, making them the largest electricity users in the state.

Together the two plants use about 2.6 million tons of Kentucky coal a year, worth about $132 million. The coal is mostly trucked in with some shipped in by barge since the plants are located close to the mines, Littrel said.

The idling of the two coal plants will result in the loss of about 188 jobs Littrel said.

With the idling of the two plants, Littrel said the company would spend less than the $60 million it had planned to spend to upgrade its coal fleet to meet the latest federal environmental rules, mostly to reduce mercury emissions.

Big Rivers does not plan on retiring any of the roughly 1,700 MW of coal-fired generation it operates in Kentucky, including the two plants the company will idle, Littrel said.

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