Gas-powered energy suppliers negotiate plans to establish 1.3 GW of electricity generation, primarily for data center operations
Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) Settle on Gas-Fired Generation Project
Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), both subsidiaries of PPL Corporation, have reached a settlement agreement to construct approximately 1.3 GW of gas-fired generation to meet Kentucky's growing energy demands.
The agreement, filed with the Kentucky Public Service Commission (KPSC), supports the construction of two new 645-megawatt natural gas combined-cycle units. The first unit, Brown 12, is expected to be operational in 2030, and the second, Mill Creek 6, in 2031.
The agreement aims to maintain safe, reliable service while enabling economic development, including for data centers and emerging loads in the state. The new gas units can serve new high-demand customers, such as data centers, while likely enabling phased retirement or reduced reliance on coal plants.
Regarding the impact on the retirement of coal-fired power plants, the agreement implicitly facilitates the replacement of older, less efficient coal generation with modern, efficient gas-fired units using advanced technology. This transition is consistent with broader industry trends towards cleaner natural gas generation as a replacement for coal, improving environmental outcomes and grid reliability.
The agreement includes several criteria for the KPSC to assess the reasonableness of the utilities' spending. It also delays the retirement date of the 297-MW, coal-fired Mill Creek 2 until the in-service date of Mill Creek 6, a planned gas-fired unit.
The settlement agreement includes the approval of two 645-MW combustion turbine units at two power plants and a selective catalytic reduction system to be added to the coal-fired Ghent generating station's Unit 2.
The parties to the agreement include LG&E and KU, Kentucky's attorney general, Kentucky Industrial Utility Customers, the Southern Renewable Energy Association, and the Kentucky Coal Association. The PSC has set a hearing on the agreement to begin on Aug. 4.
The utilities will start filing annual reports on their participation in the Southeast Energy Exchange Market, including company-specific cost and benefit assessments, from next year. The Sierra Club sought a measure for semi-annual updates from LG&E and KU in the agreement.
The agreement does not mention any changes to the expected in-service dates of the new gas-fired units (2030 and 2031). PPL Corp. has not changed its $20 billion capital plan, which runs through 2028, or rate base projections, as it expects to make additional investments, including transmission investment to support data centers in Pennsylvania.
If the PSC approves the agreement, the utilities will withdraw their proposal for a four-hour, 400-MW battery electric storage system at LG&E's Cane Run power plant. The utilities have agreed to give semi-annual construction, economic development, and load forecast updates to the PSC as part of the settlement.
References: [1] Louisville Courier Journal. (2023, May 11). PPL Corp. utilities to build 1.3 GW of gas-fired generation in Kentucky. Retrieved from https://www.courier-journal.com/story/money/companies/2023/05/11/ppl-corp-utilities-to-build-1-3-gw-of-gas-fired-generation-in-kentucky/71911587007/
[2] Lexington Herald-Leader. (2023, May 11). PPL Corp. utilities to build 1.3 GW of gas-fired generation in Kentucky. Retrieved from https://www.kentucky.com/news/business/article271420914.html
[4] PPL Corp. (2023, May 11). PPL Corp. utilities reach settlement agreement to build approximately 1.3 GW of gas-fired generation in Kentucky. Retrieved from https://www.pplweb.com/about-us/press-releases/2023/may/ppl-corp-utilities-reach-settlement-agreement-to-build-approximately-1-3-gw-of-gas-fired-generation-in-kentucky
The settlement agreement between LG&E and KU, subsidiaries of PPL Corporation, involves constructing gas-fired generation to cater to Kentucky's growing energy demands, which includes two new natural gas combined-cycle units (Brown 12 and Mill Creek 6). This transition from coal to gas-fired units in the industry is expected to improve the environmental outcomes and grid reliability, aligning with broader trends in the finance sector towards cleaner natural gas generation.
