By Ryan Van Velzer
March 6, 2023 - The Kentucky Senate approved a bill that would make it harder for utilities to retire coal-fired power plants. The utility industry says it will raise costs for ratepayers.
Coal power is on its way out. Retirements are on the rise even as Kentucky continues to generate the majority of its power from ancient, carbonized plant matter.
But some Kentucky lawmakers are determined to protect the legacy industry, even if doing so goes against what power companies say is realistic.
Republican Sen. Robby Mills of Henderson is concerned retirements are happening faster than the power plants can be replaced. On the Senate floor last week, he cited a recent report from one of the nation’s largest grid operators that says the current pace of new power generation is insufficient to keep up with retirements and demand growth.
“This is unbelievable,” Mills said. “This is what Senate Bill 4 is, it is action to help improve the reliability and to keep, and to help [stave] off, what is the coming capacity shortage.”
Mills ignored the fact that utilities say prolonging the life of coal power not only hurts the environment, but will make the cost of energy less affordable.
Under Mills’ proposal Senate Bill 4, in order to retire a coal generating unit, utilities would have to prove that they can replace it without affecting grid reliability, dispatchability, or increasing electricity rates. The legislation passed 25-8 last Thursday, with four Republicans joining four Democrats to oppose the bill. It now moves to the House.
Putting aside for a moment the climate risks, representatives from Louisville Gas and Electric and Duke Energy told lawmakers during a committee meeting that the bill would actually raise costs on customers by forcing utilities to operate coal plants well past their useful lives.
Continuing to operate coal plants past their useful lives is a bit like fixing up an old car – at some point the returns diminish. The average age of today’s remaining coal fired power plants is around 45 years old, according to the U.S. Energy Information Administration.
Democratic Sen. David Yates of Louisville was among those who voted against the bill, saying it would bind the hands of utilities and regulators.
“I think when we overregulate and we tie those hands, we have additional costs,” Yates said.
The decline of coal in eastern Kentucky
Fellow Democratic Sen. Robin Webb of Grayson voted in favor of the legislation. She said she’s been a coal miner and has put solar panels on a home, but she’s concerned about the future of grid reliability.
“I’ve always said that coal is a multigenerational fuel that will carry us in, or should carry us in whatever direction we go in diversification,” Webb said.
Webb joined Republicans from eastern Kentucky who are concerned about the economic impacts the transition away from coal has had on a region that once relied on it for its prosperity. Coal production has declined from a high of around 28 million tons to just about 3 million tons as of last year, according to the Energy and Environment Cabinet.
Eastern Kentuckians already pay the most for electricity in the state, according to a state analysis last year.
That’s because Kentucky Power has lost more than 10,000 customers as people leave the region, including heavy electricity users in the coal mining and steel industries. As industry shuttered and people moved away, fewer ratepayers remained to help cover the utility’s fixed-costs.
Sen. Phillip Wheeler of Pikeville was one of the Republicans on the Senate floor last week who blamed the decline of coal on federal regulations beginning in the Obama administration.
“My region, my home, has lived through the devastation wrought by Washington on rural America through their insatiable efforts to go green,” Wheeler said. “As they fly around in their corporate jets, these limousine liberals, lecturing to the rest of us how we need to get clean.”
The role of policy in coal retirements
Older, less efficient coal plants are increasingly losing to market competition from natural gas and renewables. But regulations also factor into the retirement of coal-fired power plants, according to the PJM report Mills cited. It found policy will have the single largest impact on future coal retirements.
These policies include federal and state rules that reduce coal ash pollution in water, air and soils. These rules are designed to limit disease and premature death, and environmental harm caused by coal pollution – and that pollution is extensive. The ash leftover from burning coal is polluting groundwater across the state, causing mercury to bioaccumulate in fish and causing premature deaths.
And that’s not including the environmental degradation caused by the mining of coal, or that many of these policies have the co-benefit of reducing the emissions of heat-trapping gases in the atmosphere.
Mills, the sponsor of SB 4, dismissed the role that climate change plays in debate on the Senate floor.
“Utilities are under increasing pressure from the Biden administration and from investors to phase out fossil fuel resources, especially coal, for the sake of mitigating climate change,” he said.
In spite of these policies, carbon emissions reached a new high in 2022, according to the International Energy Agency. Climate scientists warn the planet must halve carbon emissions by 2030 and reach net-zero by 2050 to avoid the worst impacts of warming.
Outside of that one comment from Mills, lawmakers failed to recognize the challenges that climate change has brought to Kentucky and that will only grow if the world does not act.
Republican Sen. Stephen West of Paris voted for the bill, but didn’t believe that legislation would do anything to decrease cost to Kentuckians.
“Our constituents are going to see higher electricity costs going forward, and if you live in eastern Kentucky, those costs are going to be very, very significant,” West said. “The war on coal is basically over, and they won.”