March 7, 2024 - A bill backed by the Republican Kentucky Senate president would create new hurdles for utilities to retire fossil fuel-fired power plants, building on last year’s law that made it harder for utilities to move away from coal and natural gas.

Senate Bill 349, primarily sponsored by Sen. Robby Mills, R-Henderson, was approved Wednesday by the Senate Natural Resources and Energy Committee. It would create an entirely new 18-person commission, separate from the state’s existing utility regulator, charged with examining and making recommendations on requests from utilities to retire fossil fuel-fired power plants. The new commission, which would be attached to the University of Kentucky Center for Applied Energy Research, would also study energy issues including “the adequacy of the Commonwealth’s energy supply.”

In a Lantern interview, Mills characterized the bill as “continued progress” to ensure “due diligence” so that “we’re not losing capacity too soon.”

“I think this is going further to look at options for sustaining power plants that are here if that’s a possibility, or which direction we should move our state in” with energy, Mills said. 

Investor-owned utilities, environmental advocacy groups and the president of a libertarian think tank all spoke against the bill before the Senate committee on Wednesday. They cited numerous reasons including that it could harm ratepayers by keeping aging coal-fired power plants on the grid when lower-cost alternatives exist, such as natural gas and renewable energy. Utilities and environmental groups also strongly opposed a bill last year that made it harder to retire fossil fuel-fired power plants. 

The chairman of the Kentucky Public Service Commission (PSC), the state’s utility regulator, and the secretary of the Kentucky Energy and Environment Cabinet also expressed concerns in a letter to the committee, including that the bill would burden the PSC with extra work without providing extra funding. 

Amy Spiller, the president of Duke Energy’s utility operations in Kentucky and Ohio, told lawmakers the bill would “create needless review by a new governmental authority comprised of many members having pre-existing biases.” 

“We know the critical role that access to reliable, affordable power plays in Kentucky’s future, but the issues impacting the provision of safe, reliable, resilient electric service in the commonwealth are complex,” Spiller said. “One cannot responsibly evaluate the issues by narrowly concentrating on one input, one fuel source to the exclusion of all other inputs.” 

The bill makes a series of declarations about the need for adequate, reliable energy from all sources, the need to keep fossil fuel-fired power plants from “premature” retirement” and that there is an “electric generation resource crisis” in Kentucky — an assertion that the president of Louisville Gas and Electric and Kentucky Utilities (LG&E and KU) has said is “simply incorrect.” 

“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,” Spiller said to the committee. 

Criticisms levied against ‘EPIC’

Under SB 349, utilities would have to give notice of a request to retire a fossil fuel-fired power plant to the new commission, dubbed the Energy Planning and Inventory Commission (EPIC) at least 365 days before officially filing the retirement request before the Kentucky Public Service Commission (PSC), the state’s utility regulator which has the power to grant or deny such requests.

EPIC would also be required to hold a public hearing in the county where the requested power plant is located, something the PSC has normally done in the past after a utility files a retirement request. 

While EPIC would have 18 total members, a five-member executive committee would be charged with creating a report examining a fossil fuel-fired retirement request, including if alternatives exist for the retirement, whether the retirement would create a “loss of revenue” for local and state government and how it would impact electricity supply. 

A utility’s application for a retirement request wouldn’t be considered complete before the PSC unless it includes the EPIC report, under SB 349, and the PSC isn’t allowed to make a decision on a retirement request without considering the EPIC report. The executive committee of EPIC would also be allowed to intervene in any PSC case.

Critics of SB 349 also took issue with the proposed membership of EPIC. LG&E and KU president John Crockett said membership  representing various fuel sources would make it an “inherently political body” weighing heavily toward utilities and industry with  little representation for ratepayers. 

The 18-person membership of EPIC would include representation for utilities, nuclear energy, the Chamber of Commerce and one member each representing residential customers and the renewable energy industry. But its membership would also have a significant presence from the fossil fuel industry, including members each for coal miners, coal transporters, natural gas transporters, oil and gas producers, and fossil fuel sellers.

Audrey Ernstberger, a lobbyist for the legal environmental group Kentucky Resources Council, said EPIC would be staffed with members “that have a financial interest in advocating against the retirement of fossil fuel plants.” 

Ernstberger also said the bill could violate the due process rights of parties intervening before the PSC by having the PSC consider a report from an entity, in this case EPIC, not subject to cross examination or discovery during the case.

EPIC “does not consider other important issues such as public health, climate change impacts and environmental justice,” Ernstberger said before the committee. “We fear the bill would game the regulatory process against renewable energy.” 

Renewable energy sources such as solar or wind energy are traditionally known to be “intermittent,” or only able to provide energy during some portions of the day, such as when the sun is shining. But renewable energy advocates have argued that renewables paired with utility-scale batteries will be  “dispatchable,” or able to be called up on demand.

Instead, SB 349 defines renewables paired with batteries as “intermittent,” along with including geothermal energy and biomass energy as intermittent. 

In a joint letter sent to the committee, PSC Chairman Kent Chandler and Energy and Environment Cabinet Secretary Rebecca Goodman took issue with the definition of “intermittent” in the bill, saying it’s “not the case” that certain energy sources can’t provide “consistent and dispatchable power.” 

Goodman and Chandler also wrote that some of the bill is redundant, considering that utilities already report data on future energy demands and the North American Electric Reliability Corporation already performs reliability assessments of the grid, something that’s available already to the state government. 

Their letter also expressed concerns about a provision in the bill that sets a six-month deadline for the PSC to issue decisions in cases about power plant retirements and rate adjustments to reflect the cost of fuel. 

“The commission does not currently have sufficient staff to meet those deadlines and will require additional employees to do so,” the letter read. 

Chandler had previously testified before lawmakers that the PSC was facing more complex cases and more cases in general with fewer staff than in the past. 

Stivers, other Republicans defend need for ‘EPIC’

Republican lawmakers including Stivers, Mills and the Sen. Brandon Smith, R-Hazard, the chair of the Senate committee, defended the legislation, asserting that rising energy costs were attributed to burdensome federal environmental regulations on utilities. 

“This is not a coal-focused issue. The reality is we know there are potential alternative fuels out there,” Stivers said, mentioning that utilities have called for creating an energy-focused working group instead. “This is a valid, good-faith attempt to have an energy discussion, and you can see the impacts of it and the need for it soon.” 

Stivers also siad EPIC would consider “whether you believe in it or not — decarbonization or global warming.” 

Burning coal is the single largest source of global temperature increase due to emissions of heat-trapping greenhouse gas emissions, according to the International Energy Agency. Last year, the secretary-general of the United Nations, citing research from climate scientists around the world including from NASA, called on rich countries like the United States to end use of coal by 2030 and have carbon-free electricity generation by 2035, which means no new natural gas plants either, to prevent the worst effects of increasing climate change.

Generally, coal has also been outcompeted on the cost of electricity compared to energy generated through natural gas and renewables. A study last year from the think tank Energy Innovation and Policy found that 99% of existing coal-fired power plants in the country are more expensive to operate compared to adding new renewable energy. 

Mills told the Lantern decarbonization is expected to be talked about under the proposed EPIC but that it wouldn’t be a main driver of the commission’s research. 

“It’s not one of the main things that we’re legislating for them to decide whether, you know, decarbonization is good or bad or whether global warming is a big issue or not,” Mills said. “I don’t think that’s a priority for the [EPIC] commission right now. I don’t want it to be.” 

Asked about critics’ arguments that SB 349 would keep aging, uneconomical coal-fired power plants on the grid, Mills said he would be fine with retiring such plants as long as he can show the public that an “independent voice” through EPIC confirms that. 

“This is a little bit of a government bureaucracy, a layer of government bureaucracy, but I think we’re in such dire shape in energy, as far as reliability and the future of energy, that we’ve got to prove to our constituents that everything’s being done that needs to be done,” Mills said. 

Crockett, the LG&E and KU president, last year rebuffed assertions that Kentucky is in an energy reliability crisis, saying rolling blackouts during Winter Storm Elliott in Dec. 2022 were an unprecedented event, not a regular occurrence. The utility cited a loss of pressure in a natural gas pipeline as reasoning for the rolling blackouts then, though testimony before the PSC also showed some coal-fired power had failed during the winter storm, too. 

Asked about the PSC’s concerns about handling the demands of cases under a six-month deadline, Mills said more funding for the PSC is being discussed to help the regulatory agency meet tighter deadlines for cases. 

Stivers in the committee hearing said SB 349 is just a draft, and Mills told the Lantern, in light of concerns that EPIC’s membership favors fossil fuels, that he’s allowing utilities to “make a list” of who should be a part of EPIC.

“I just think that it’s important for us to look back on the things that historically that Kentucky has done well, and those folks should have representation,” Mills said. “So, that’s coal and natural gas.”