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LG&E, KU Want to Put Natural Gas Facility in Muhlenberg on Hold

ku company logo 300MADISONVILLE, Ky. (4/30/14) — Madisonville is one of nine municipalities considering the termination of its contract with Kentucky Utilities if an agreement cannot be reached between KU, which supplies the city with the electricity it manages for its customers.

KU and LG&E have asked the Kentucky Public Service Commission for a hold on its case concerning the utility's proposal for a natural gas, combined-cycle generating facility in Muhlenberg.

That case also includes a 10-megawatt solar photovoltaic facility in Mercer County. The other eight municipalities negotiating their contracts include Providence, the Frankfort Electric Power and Water Plant Board, the cities of Barbourville, Bardwell, Berea, Corbin, Falmouth and Paris.

The contract negotiation is part of a five-year cycle, according to a KU/LG&E spokesperson. The municipalities' negotiations have nothing to do with building of the proposed plants but rather rate negotiations. KU/LG&E have asked the PSC for a 90-day abeyance on the case until the companies have a chance to meet with the municipalities and discern whether the contracts will be renewed. That determination will have an effect on whether the projects will continue.

The municipalities have sent letters of termination effective 2019 as part of their agreements to provide sufficient notification.

In a press release, David Sinclair, vice president of Energy Supply and Analysis, said the need for the additional generation facilities was based on energy forecasts through 2035.

“We have been long-term partners with our municipal customers, providing them some of the lowest-cost energy in the country,” stated Sinclair. “We extended an offer to continue discussions and remain hopeful that we can come to a mutually acceptable resolution. However, if they choose to move forward with the termination of their contracts and find alternative sources of energy, that is their prerogative, and we must continue to provide the lowest-cost energy to our remaining customers.”

The potential loss of the nine municipal customers does not impact service to LG&E and KU's remaining 1.2 million customers since KU simply supplies electricity to the municipal customers, who in turn provide service to their customers; but it may impact the cost to serve these retail customers in the future, the press release stated.

Rita Dukes Smith
SurfKY News Director

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