Duke Energy and the Northern Kentucky Chamber of Commerce are clapping back at legislation they say would increase NKY energy costs by making it harder to close aging power plants.
The legislation – Senate Bill 349 – would prohibit utilities from moving forward with plans to shut down an aging power plant without study and review from a newly proposed 18-member Energy Planning and Inventory Commission, dubbed “EPIC.” Utilities would have to notify EPIC at least 180 days (amended down from one year by the Senate Tuesday) before they apply to the state’s utility regulation agency – the Kentucky Public Service Commission – to take the plant out of commission, then wait for further action.
New power plants would have to be fully operational before a utility takes steps to retire an existing plant “unless the utility can demonstrate it is not needed to provide a reliable service,” SB 349 lead sponsor Sen. Robby Mills (R-Henderson) told the Senate Natural Resources and Energy committee before it advanced the bill last Wednesday.
Duke Energy Ohio and Kentucky President Amy Spiller said SB 349 would create “needless review” with “preconceived biases,” leading to increased NKY energy costs and jeopardizing reliable service. Spiller made those comments opposing SB 349 before the Senate committee last week alongside NKY Chamber Vice President of Public Affairs Tami Wilson.
SB 349 passed the Senate on a 28-9 vote Tuesday, with one pass vote. It now goes to the House for its consideration.
Just how much NKY rates could increase is uncertain, Spiller said in a phone call with LINK nky. Customers would, she said, likely be required to pay for “operation and maintenance of a power plant that is not serving them.”
At issue is Duke Energy’s East Bend coal-fired power plant, a 43-year-old electric generation plant located in Rabbit Hash. East Bend is one of two power plants serving NKY. The other is the dual-fuel Woodsdale plant, located near Trenton, Ohio. Altogether, Duke Energy has approximately 150,000 electric customers and 100,000 natural gas customers in its seven-county NKY service region. It also generates 12 megawatts of solar energy for the region.
Spiller said “a probable retirement date” of 2035 has been identified for the East Bend plant. Last year, however, state lawmakers passed Senate Bill 4 (with Mills as the bill sponsor) – a bill that Spiller said prevents Duke Energy from applying costs to retire East Bend to its current rates, effectively shifting $50 million to $100 million in “stranded costs” to future customers.
SB 349 “is otherwise silent with respect to the ongoing cost that would be associated with this new commission and this duplicative layer of review,” Spiller told LINK. “But those are costs that would certainly be borne by our customers. And we also need to keep in mind that if a generating plant past its useful life is unable to retire, you could have a circumstance where Northern Kentucky customers are paying to keep East Bend online for needs outside Northern Kentucky.”
Wilson pointed to the coal industry as benefiting from SB 349 in her testimony before the committee on Wednesday.
“While we empathize with Eastern Kentucky and the loss of jobs associated with the coal industry, we feel strongly that forcing our members, and potential members, to pay more for their energy simply to ensure we continue to support the coal industry is not a reasonable ask of the Northern Kentucky region,” Wilson told lawmakers.
The NKY Chamber believes “it is essential to maintain policies that foster a business-friendly climate. SB 349, in its current form, does not align with this principle,” she said.
Mills – whose home county is in the west Kentucky coal region – described the bill in committee as simple legislation focused on “due diligence” for all Kentucky’s ratepayers.
EPIC, he said, adds a layer of review to ensure power plants stay in service until new energy sources are “ready to meet Kentucky’s energy needs.” It would bring industries together to talk about what those future needs are, Mills explained.
However, Spiller said questions about reliable, accessible energy would best be addressed in a working group, not a new regulatory group. She asked the committee to oppose SB 349 as written and instead bring together utilities, regulators, fuel suppliers, legislators, transmission operators, and customers differently.
The working group should, for one, consider broader issues of federal versus state jurisdiction in energy transmission and other factors, Spiller said. State authority is limited when it comes to electric generation, she told the committee.
“SB 349’s directive that a newly formed commission look across the Commonwealth and determine if there are reliability concerns that could be addressed by denying the closure of a power unit is not realistic,” Spiller said.
Pushing for passage of SB 349 is Kentucky Senate President Robert Stivers. Stivers – the lead cosponsor of the bill — represents Clay County in the state’s eastern coal region.
The Senate’s top leader responded to last week’s committee testimony on the bill with slight confusion, saying he had to “go back and get the bill out to see if I read it” after hearing much of the testimony opposing the measure.
SB 349, he insisted, is not “coal focused.” All energy sources would be studied by EPIC as part of the bill’s prescribed process, said Stivers.
“We know there are potential alternative fuels out there and this is an attempt to create exactly what everybody’s talking about, a study group from all sectors of the energy society,” Stivers said. “This is an attempt to start putting in place a committee that will look at future years and estimate future year demands and make sure that we stay reliable, cost efficient, competitive and keep people here who are here and be able to attract individuals and companies because of low energy cost.”
Not that there isn’t room for improvement to the bill, said the Senate president.
In response to a question from Louisville Democrat Cassie Chambers Armstrong regarding a proposed six month limit in the bill for the PSC to agree to a plant’s retirement or not, Stivers said, “There will be further discussion on the budgetary side of this.” (The six month limit was expanded to eight months under a Senate floor amendment Tuesday.)
“This is the starting point of what I think could be a really good piece of legislation,” he said. “Is it in its final form? Not hardly.”