Big Rivers Electric Tuesday notified Kentucky regulators and the Henderson municipal utility that owns a 312-MW coal-fired plant that it was terminating a long-term operating agreement at end-May 2019.
Big Rivers, a Henderson-based generation and transmission co-op, has operated the Station Two plant since the facility opened in 1972, Jennifer Keach, the co-op's spokeswoman, told S&P Global Platts in an interview.
"We've experienced losses for several years," said Keach, adding Big Rivers has concluded the plant is "no longer capable of normal, continuous, reliable operation in an economic manner."
In a filing with the Public Service Commission, Big Rivers seeks commission approval to establish a regulatory asset to defer contract-related expenses. The Rural Utilities Service already has told Big Rivers it has no objections to such a request.
Although Big Rivers and HMP&L have discussed such a possibility, the official contract termination announcement leaves the city in somewhat of a lurch.
HMP&L plans to spend the next couple of months evaluating its options, Chris Heimgartner, HMP&L general manager and CEO, said in an interview. Those options include finding another operator for Station Two, purchasing wholesale power from the market or retiring the plant next spring.
The muni currently reserves 115 MW of Station Two's output, with Big Rivers free to sell the remainder on the open market.
Keach said all of Big Rivers' existing coal supply deals are expected to expire before May 31, 2019 but will continue to own and operate the 454-MW Green and 417-MW D.B. Wilson coal plants in western Kentucky.
