Small rural co-op planned to provide power to new Ford plant. Then KU came knocking.

Austin Horn
Mon, January 10, 2022

Before the grand announcement on the Capitol steps heralding the state’s largest-ever private investment, $5.8 billion by Ford Motor Company and SK Innovations for plants in Hardin County, two companies fought over who would get to call the occupants its customers.

Kentucky Utilities (KU), the state’s largest power company, occupies roughly 20% of the electric service boundary on the 1,551-acre site that will manufacture batteries for electric vehicles near Glendale. The much smaller, not-for-profit Nolin Rural Electric Cooperative (RECC) has the remaining 1,200 acres according to maps provided by the Cabinet for Economic Development. Both Nolin and KU claimed that they should provide electric service to what could become one of the state’s largest electric service loads.

KU won the argument.

The companies agreed to a settlement that would make the company, which along with its sister company Louisville Gas & Electric serves well over a million customers, the sole provider of electricity to the site according to a joint settlement agreement filed to the state’s Public Service Commission (PSC).

Nolin RECC would get 800 acres of largely undeveloped nearby land and an amount of money redacted from the agreement in exchange if the PSC approves.

The PSC is responsible for regulating the state’s utilities and protecting their customers, and any modification to service territories needs their stamp of approval.

How that agreement was reached, despite Nolin RECC territory currently taking up a vast majority of the site, is unclear. The settlement hints that part of the incentive for Nolin to hand over its territory was “to avoid protracted and costly litigation” had it dug its feet in.

Tom FitzGerald of the Kentucky Resources Council said that it’s hard to know if the deal is fair to Nolin without knowing how much money KU gave the co-op in exchange for the valuable service territory.

“Unless you’re a party to this case, you’re not going to know, and even then you couldn’t share that knowledge due to the confidentiality request unless it is denied by the commission,” Fitzgerald said. “… It’s impossible to look at what is publicly available and determine whether those customers are benefiting from this deal or not.”
Why is this happening?

The governor’s office has not responded to questions about whether it was involved in the swap, instead deferring to a spokesman for the Energy and Environment Cabinet who only gave a brief overview of the case’s timeline. He added that the two utilities have filed a petition for the PSC to approve the agreement by Feb. 1.

KU, for its part, said that its existing relationship with Ford played a role. Ford has a truck plant and an assembly plant in Louisville, which are located within the service boundary of its sister company Louisville Gas & Electric (LG&E).

“Given our current relationship with Ford as an LG&E customer, it made sense to expand that relationship to include Kentucky Utilities,” KU spokesperson Chris Whelan wrote in an email to the Herald-Leader.

KU deferred to the governor’s office and Ford on questions regarding Beshear’s involvement in the swap and if Ford had a preference for either KU or Nolin.

A Ford North America media representative has yet to respond to a request for comment.

President & COO of Elizabethtown/Hardin County Industrial Foundation Rick Games didn’t offer comment on the deal, saying it was “above his paygrade.”

Neither Nolin RECC or East Kentucky Power Cooperative (EKPC), of which it is a member, offered comment. EKPC is a not-for-profit organization owned by 16 smaller co-ops like Nolin around the state. EKPC generates and transmits power to its owner/members, which distribute, and in total provides power to 1.1 million people. It has access to the PJM Interconnection, one of the largest energy markets in the world. In a publicly-available revenue report from 2019, the Winchester-based company posted more than $887 million in revenue.

KU/LG&E, by contrast, are for-profit and control generation, transmission and distribution of power. They’re owned by Pennsylvania-based PPL Corp, a publicly traded company worth more than $22.7 billion.

According to Yahoo Finance, KU/LG&E serves just under a million electric customers across Kentucky and 332,000 natural gas customers in the Louisville area.

EKPC’s 16 members cover much more total territory than KU, but serve less dense places that are harder to reach. Many of its co-ops were formed under the Rural Electrification Act, a New Deal program that provided massive federal loans to such entities to power rural America.

EKPC was actively advertising the site on its own channels, creating a webpage featuring drone footage, renderings and other information to do with the site on its dataispower.org. The company produced similar pages for other industrial sites across the state, including another in Hardin County.

The settlement agreement states that the cost estimate for removal of EKPC’s and Nolin RECC’s facilities on site, including a transmission line, is around $4 million.

One of three commissioners on the PSC, Marianne Butler, has not participated in discussions or deliberations on the case, according to PSC documents. Butler is a former manager of community initiatives at KU/LG&E and also served on the Louisville Metro Council for 12 years.

Above is a map detailing the boundaries for the Glendale megasite.

A map detailing the current electric service territory for the Glendale site; current Kentucky Utilities territory is marked in yellow while the rest is Nolin RECC territory.
PSC asking questions

In a “data request” filed last week, the PSC asked for information concerning the logistics of the service to the incoming twin battery plants and the impact of that service to ratepayers as well as data backing any projections made in the settlement agreement.

The PSC asks for estimates concerning cost of service to the site for both KU and Nolin RECC.

It also asks for explanation, documents and studies that led them to the determination of the redacted settlement money that KU is paying Nolin in exchange for the megasite land.

Responses to the PSC’s data request are due Wednesday and were not submitted by late Monday morning, according to the PSC.