Kentucky bill to create future-oriented energy commission advances as coal power plants close

Kentucky lawmakers advanced a bill Wednesday to form a commission tasked with assessing electric generation capabilities and energy demands in a state long known as a coal-producing powerhouse.

The commission’s role would include reviewing plans by Kentucky utilities to retire power plants, and its findings and recommendations would be submitted to regulators at the state Public Service Commission. The shuttering of coal-fired power plants has been an agonizing issue in Kentucky's coalfield regions, contributing to a deep decline in coal-related jobs.

Supporters of the bill said the overarching goal is to ensure that the Bluegrass State has ample supplies of reliable energy sources to fuel a growing economy. Business and conservation critics portrayed the bill as a potential barrier to the replacement of aging and inefficient coal-fired power plants.

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The measure, cosponsored by the Senate's top leader, received its first hearing Wednesday when the bill cleared the Senate Natural Resources and Energy Committee. The proposal goes to the full Senate next and would still need House approval. Both chambers have Republican supermajorities.

"Senate Bill 349 simply requires due diligence and a thorough review to ensure existing capacity is not retired too quickly, and that any new or replacement generation is ready to meet Kentucky’s energy needs," said Republican Sen. Robby Mills, the bill's lead sponsor.

The bill also drew pushback from some leading utility executives who said it would add another layer of bureaucracy overseeing an industry that's already heavily regulated.

"This is a bill that would create needless review by a new governmental authority, comprised of many members having preexisting biases," said Amy Spiller, president of Duke Energy’s utility operations in Ohio and Kentucky. "An authority that cannot accomplish its predetermined operational objective without jeopardizing reliability, affordability and blunting Kentucky’s economic growth."

The legislation would create the Energy Planning and Inventory Commission. Its members would mostly be appointed by the governor and confirmed by the Senate. The 18 members would include a handful of people associated with fossil fuel industries but would include a range of other people.

Its roles would include assessing the adequacy of the state’s electric generation capabilities, anticipated future statewide electric demands and the energy grid’s ability to withstand natural disasters. It also would review the economic impact to an area if a power plant were to close.

Under the bill, a utility would have to inform the new commission’s five-member executive committee at least a year before submitting to the PSC its application to retire a power plant. The executive committee would review the proposed plant retirement and submit its findings to the PSC.

A utility could not start a plant's decommissioning until its replacement is constructed and in operation, unless the utility can demonstrate the replacement generation is not needed to provide reliable service.

The bill reflects a top priority of Republican Senate President Robert Stivers, who has called for a closer look at the state's future energy-producing capabilities and consumer demands. "This is an attempt to really focus in on energy because it is what makes and drives our economy," he said.

Spiller agreed that there’s a need for a collaborative study about the state’s energy needs, but said the group can’t be "artificially weighted" toward one preference.

"We cannot simply suggest that an aging and antiquated unit must be kept online to solve all of the future growth needs in the commonwealth," she said.

Stivers responded that it's not a "coal-focused issue." He noted that the bill recognizes an "all-of-the-above approach" to power generation, including coal, oil, natural gas, wind, solar, hydropower and nuclear. The Senate recently passed a bill aimed at laying the foundation to attract nuclear energy projects to Kentucky. The bill is pending in the House.

"The reality is we know there are potential alternative fuels out there," Stivers said Wednesday. "And this is the attempt to create exactly what everybody’s talking about, a study group from all sectors of the energy society."

Kentucky’s coal industry has declined drastically over the the last two decades, with the state producing about a quarter of the coal it mined 20 years ago. But the state still generates about 68% of its electricity from coal, though that number has declined from about 90% historically as the power generating industry closed coal plants and switched to generators powered by cheaper natural gas.