The commission’s Oct. 16 order allows the project to proceed, with conditions that include Kentucky Power using a $51 million U.S. Department of Energy grant toward the cost. The utility said in July that it was working to finalize the grant agreement. The project costs will be divided between Kentucky Power and Wheeling Power, both subsidiaries of American Electric Power.

The commission said evidence presented by Kentucky Power showed the existing tower no longer meets design requirements, poses a safety risk and could fail during extreme weather. The utility has also said the tower’s condition could force part of the plant’s capacity offline, complicating its ability to meet requirements for participation in the PJM regional power grid.

The utility may seek to recover its share of the project’s costs from customers in a future rate case or through another mechanism. The commission did not decide how much, if any, customers would ultimately pay. It ordered Kentucky Power to provide updates on construction, demolition and the grant’s status.

The decision comes as Kentucky Power faces scrutiny over its planning and service to a 20-county region in Eastern Kentucky, where many communities have high electricity bills and some of the state’s lowest incomes. The commission is conducting an audit of the utility’s planning practices.

The Sierra Club did not oppose the tower work if the federal grant was applied to the project, but argued that the funding should not sidestep concerns about the company’s analysis or prevent future consideration of new power generation. Kentucky Power opposed a Sierra Club proposal that would have required additional modeling of future electricity-generation needs; the commission did not adopt that requirement.

Kentucky Power spokesperson Sarah Lynch said Monday the approval would let the company proceed with what she called an important investment to support reliable service at the lowest reasonable cost. The plant is more than 50 years old and is scheduled to retire in 2040.