Ashland Alliance

Kentucky Power offering custom contracts to help coal

PIKEVILLE, Ky. — Coal production in eastern Kentucky is seeing growth, increasing 9.2 percent in the second quarter of 2017 over the same period last year, according to the Kentucky Quarterly Coal Report.

Earlier this year, Kentucky Power sought and received permission from the Kentucky Public Service Commission to launch the Coal Plus program to alter its rate structure to offer custom contracts to coal businesses struggling to stay open or reopen their mines and put miners back to work in eastern Kentucky.

The plan gives Kentucky Power flexibility in designing special contracts with coal companies and coal processing businesses, such as providing a discount for companies that agree to operate under an interruptible rate.

Mark Jenson, chief executive officer of Quest Energy, said the company has benefited from the program.

“It is no secret that the coal market has faced challenges and we were looking to save,” Jenson said. “Kentucky Power’s interruptible power program has enabled us to stay open and expand operations. Elkhorn and Mill Creek will start up in September. That will create a number of very good jobs for the community.”

With an interruptible rate, Jenson said he will be able to cut 10 percent off his electricity bill. When you look at the amount of electricity used by a coal operation, 10 percent can mean the difference of staying in business or closing, he said.

Under an interruptible power agreement, customers get a lower rate and agree to reduce their electric use to a certain level within a specified timeframe, such as 30 minutes, to accommodate high demand from other customers. Severe weather conditions could be one instance when an interruptible customer may be asked to reduce usage.  

“There is a new paradigm in the coal industry,” Jensen said. “As leaders, it is up to us to explore all our options. Coal companies have to find ways to save money without jeopardizing safety. Efficient and safe solutions like this that don’t compromise safety are important.”

Kentucky Power President Matt Satterwhite said the Coal Plus program is one of Kentucky Power’s offerings aimed at furthering partnerships in the region. Kentucky Power also has rejoined the Kentucky Coal Association, whose mission is to enhance the ability of the Kentucky coal industry to compete.

“Eastern Kentucky is primed for economic growth,” Satterwhite said. “Coal remains an important part of our communities and our business. About 80 percent of our electricity is generated using coal and we will continue to look for innovative ways to support our coal businesses.”


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