Officials with East Kentucky Power Cooperative told state regulators last week that the company no longer has plans to purchase electricity from a much-delayed power plant that would be built by Kentucky Pioneer Energy.

The power plant, which until recently was expected to use pelletized garbage as fuel, was planned to sit adjacent to East Kentucky Power's J.K. Smith Station at Trapp. East Kentucky Power was to lease the land for the new 540-megawatt plant and buy most of the electricity it produced.

In a certified letter dated June 16, the utility said there are too many "significant remaining uncertainties surrounding the KPE project" to move forward.

"EKPC no longer has the luxury of time in which to wait for the resolution of these uncertainties, and could not prudently choose to move forward with a restructured KPE project," David D. Drake, East Kentucky Power's business development manager, said in the letter.

Drake's letter did not provide details about how the utility might meet its future power requirements, which are increasing thanks to the expected addition of another rural electric cooperative.

The utility expects to need at least 500 more megawatts of power by April 2008.

Harry Graves, the president of Kentucky Pioneer Energy's parent company, said yesterday that he does not interpret Drake's letter as ending the relationship between the two companies.

"I would certainly agree there are some comments in there that we find surprising, and I wouldn't want to suggest what they're thinking," Graves said.

He said Kentucky Pioneer still thinks it has valid purchase and lease agreements with East Kentucky Power.

Drake could not be reached for comment.

The two companies first came to a power-purchase agreement in 1999, which the state Public Service Commission approved in 2000. But Kentucky Pioneer was unable to get the project financed.

The proposal also faced strong opposition from people in Clark County who objected to the prospect of trainloads of pelletized garbage coming into their community.

Because the Kentucky Pioneer project was delayed, the PSC later gave East Kentucky Power permission to build a coal-fired unit, known as Gilbert, at its Spurlock Station in Maysville.

Last year, the PSC began an investigation into whether East Kentucky Power needs electricity from both its Gilbert plant and the proposed Kentucky Pioneer plant.

In February, the PSC gave the companies until June 1 to try to rewrite their agreements if new, mutually favorable terms could be reached. Otherwise, the PSC said, its 2000 decision approving a contract between the two companies was no longer valid.

East Kentucky Power's negotiation-ending letter was written one day after Kentucky Pioneer sent state regulators a letter saying the project was progressing as planned.

The letter said the two companies were working on "a brief amendment" to their agreements, adding that Kentucky Pioneer hoped to start construction by the end of August. The letter also said the plant would burn only coal, not a mixture of coal and pelletized garbage as originally planned.

Kentucky Pioneer has a $60 million Clean Coal grant from the federal Department of Energy. Its proposed plant would use a process to turn coal and garbage into a gas. The gas would be used to produce electricity with less pollution that conventional coal- fired plants.

By John Stamper and Andy Mead