Bill making it harder to retire Kentucky coal plants heads to governor’s desk

Kentucky’s manufacturers, investor-owned utilities and House Democrats opposed the measure

by Liam Niemeyer, Kentucky Lantern

FRANKFORT — A bill backed by Kentucky’s coal industry that would make it harder for utilities to retire fossil fuel-fired power plants received final passage Thursday in the Kentucky House of Representatives, sending the legislation for Gov. Andy Beshear’s consideration. 

Senate Bill 5, primarily sponsored by Sen. Robby Mills, R-Henderson, would impose a series of prerequisites on the Kentucky Public Service Commission, the state regulator of utilities, before the commission could approve a utility’s request to retire a fossil fuel-fired power plant. 

The bill sparked strong debate over the role coal-fired power will play in the future of the state, where coal currently generates the large majority of electricity for Kentuckians. Most Republicans touted their support for coal, asserting that past and planned retirements of coal-fired power plants in Kentucky and across the country threaten the reliability of the state’s electric grid. 

“When it comes to renewable energy, I have no problem. But the wind won’t always blow and the sun won’t always shine. But coal always keeps the lights on,” said Rep. Ryan Dotson, R-Winchester on the House floor. 

Mills, the primary bill sponsor, and other Republicans point to rolling blackouts implemented by some Kentucky utilities due to arctic temperatures as a recent example as to why the legislation is needed. During a legislative hearing earlier this year about the rolling blackouts, utility leaders instead pointed to key components of a natural gas pipeline that froze as a cause behind the rolling blackouts. 

According to a recent report from the think tank Institute for Energy Economics and Financial Analysis, gas and coal power plants largely failed to perform as expected during the arctic blast. PJM Interconnection, the regional electric grid operator that includes Kentucky, saw coal and gas power plants account for 87% of the PJM’s forced outages on Dec. 24 when energy demand was peaking.

Investor-owned utilities including Duke Energy Kentucky and Louisville Gas and Electric and Kentucky Utilities have opposed the bill throughout its movement, saying the proposal could force the utilities to maintain uneconomical coal plants past their reasonable lifespan and burden consumers with the costs of maintaining the plants. 

In a statement, a coalition representing investor-owned utilities said SB4 “jeopardizes” the safety, reliability and affordability of electricity in Kentucky and that the state’s sources of electricity need to be diversified. 

“SB 4 is a fundamental departure from this proven method of regulation that will only increase rates higher than necessary to achieve safe, reliable service,” said a spokesperson for the utilities coalition calling itself Kentuckians for Affordable and Reliable Energy. “This change risks Kentucky’s current competitive advantage to attract and retain the manufacturing industries essential to our economy.”

The spokesperson for the utilities said the PSC already considers “principles of least-cost” to determine electricity rates. Utilities are required every three years to present a plan to the PSC regarding how to provide “adequate and reliable” electricity service into the future at the “lowest possible cost.”

The Kentucky Association of Manufacturers was also opposed to the bill. Association President Frank Jemley in a statement said the group remained “convinced this is bad policy that will produce higher energy costs.”

The bill passed the House 66-28 mostly on party lines, with nine Republicans joining the Democratic minority in opposition. At least one Republican cited the concerns LG&E and KU in voting against the bill. 

“They just had some concerns about it and shared it, and I was just responding to that,” said Russell Webber, R-Sheperdsville. “Time will tell. We’ll see what happens. But I was just exercising caution on it for my folks. We do have some of the lowest utility rates in the state, and I want to keep them that way.”

Almost all Democrats in the House voted against SB 4, in which Rep. Daniel Grossberg, D-Louisville, argued that the legislature was missing opportunities to embrace newer, greener energy sources.

“Coal is not coming back,” says Louisville lawmaker

“I’m going to say a very uncomfortable truth that my colleagues might not want to hear today. But someday, their children and their grandchildren will see that it’s proven true. Coal is not coming back,” Grossberg said. “Coal plants are not economical. They are not environmentally friendly. They are not reliable, and they are not the future.”

A report in January from the nonpartisan research group Energy Innovation Policy and Technology LLC found that 99% of all coal-fired power plants across the country, including all operating plants in Kentucky, were more expensive to operate than new solar or wind installations. 

LG&E and KU is requesting to retire some of its coal plants to be replaced by natural gas and solar, and the Tennessee Valley Authority, which isn’t regulated by the state PSC, plans to retire the entirety of its coal-fired power plants by 2035 to be replaced in part by burning natural gas. 

Rep. Lindsey Burke, D-Lexington, in speaking on SB4 said the reason why Kentucky was experiencing “monumental storms” was because of effects of climate change. 

“I know it’s not a popular topic here, but it’s real,” Burke said. “We can do better because we know better.” 

Burning coal releases the most carbon dioxide emissions that contribute to climate change compared to any other electricity source, and leading researchers with the United Nations have warned the global power system needs to be rapidly decarbonized to limit catastrophic impacts of rising climate temperatures. 

When LG&E and KU requested before the PSC to retire some of its coal-fired power generation, the Kentucky Coal Association intervened in the case to “protect Kentucky coal generation” and “ensure Kentucky makes the right energy investment decisions.” The Kentucky Coal Association has backed SB 4 and is urging Beshear to sign what they consider to be a “common-sense bill.” 

Mills, who received an award last year from the Kentucky Coal Association for his legislative work, said he believed even with the passage of SB 4 that the topic of energy reliability could come up next year. 

“Hopefully, this will bring some stability to our electrical grid over the next several years,” Mills said. “I’m just still very concerned about the next 10 to 15 years, as we’re making these changes over to new sources of electricity.”

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Top photo: Rep. Jim Gooch, R-Providence, presents Senate Bill 4 to the House. (Kentucky Lantern photo by Liam Niemeyer)