Coal piles up at power plant as cheap natural gas wrecks Eastern Kentucky’s economy
A utility that serves Eastern Kentucky and burns coal to produce electricity has sold $17.6 million worth of coal it didn’t need, offering yet another example of how the relatively low cost of natural gas has undermined the region’s economy.
The coal was to be used at a power plant in West Virginia co-owned by Kentucky Power, which has 168,000 customers in 20 Eastern Kentucky counties. The plant, though, could not generate electricity as cheaply as competing facilities fueled by natural gas, according to information filed with the Kentucky Public Service Commission.
As a result, the regional power-grid manager was not ordering electricity as often from Kentucky Power’s Mitchell plant. That meant coal the company had to buy under a long-term contract was piling up.
In late January, there was a 53-day stockpile of one type of coal at the plant, while the company’s target level was a 15-day supply, the PSC said in an order.
The PSC was considering a request from Kentucky Power to sell excess coal.
Kentucky Power received approval and recently notified the commission it had agreed to sell a total of 400,000 tons of coal to a Connecticut-based trading company for $44 a ton by the end of the year.
The sale comes amid a changing energy landscape in the country.
In 1990, coal-fired power plants generated about 52 percent of the electricity in the country, while natural gas produced about 12 percent,according to the U.S. Energy Information Administration.
By the end of 2017, coal’s share of national electricity generation had dropped to 30 percent and the share for natural gas had grown to 32 percent, while renewable sources such as wind energy had climbed to 17 percent.
The agency predicted the share of electricity generated using natural gas would edge even higher this summer, to 37 percent.
The switch has been hard on areas where coal traditionally underpinned the economy, particularly in Eastern Kentucky and nearby areas of Central Appalachia.
As coal-fired power plants have closed in the face of greater use of natural gas, the number of coal jobs in Eastern Kentucky dropped from 14,000 at one point in 2011 to just 3,835 in the first three months of this year, according to the state Energy and Environment Cabinet.
Floyd County Judge-Executive Ben Hale said it’s a conservative estimate that those 10,000-plus lost jobs had an average salary of at least $50,000.
That would mean the loss of $500 million in income in a cluster of about 15 counties.
“That’s a heck of a lot of money out of our economy,” said Hale, a Democrat.
The downturn has meant less money not only for families and businesses, but also local governments and schools because of a drop in revenue from a severance tax on mined coal and a lower property-tax assessment on unmined coal.
Hale said Floyd County used to get about $2 million annually — or $500,000 a quarter — from the mineral-severance tax, but with far less mining in the county these days, it received only $60,000 in the most recent quarter.
Local, state and federal officials, entrepreneurs, Kentucky Power and other businesses are working to create jobs in the region in manufacturing, energy, tourism, teleworks and other sectors, but so far nothing has come close to replacing the lost coal jobs.