A coal-burning power plant in Kentucky has become uneconomical and its continued operation will put customers at risk of substantial rates increases of up to 80 percent over the next nine years, according to an analysis by the Institute for Energy Economics and Financial Analysis. The only sensible option for Owensboro Municipal Utilities, IEEFA wrote in a memo Owensboro’s mayor and city commission, is to retire the Elmer Smith power plant, whose two units were built in 1964 and 1974 and are becoming increasingly uneconomic to operate. The plant generates hundreds of megawatts of surplus electricity, which have to be sold at market value and at a significant loss, which leaves retails customers making up the difference. As a result, IEEFA’s David Schlissel wrote, ratepayers “are needlessly subsidizing a large portion of the cost of the power from Elmer Smith that is being sold to wholesale customers.
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