Surface mining in the mountains. Credit: The Courier-Journal.
With the Kentucky General Assembly about to meet again, a new energy economic analysis from the Beshear administration targets Kentucky’s longstanding law that utilities must provide electricity at the “least cost,” concluding that it’s helping to force the state’s transition to natural gas.
It suggests that:
… policy makers may want to modify the existing least-cost framework to prevent Kentucky from relying on natural gas for all new generation capacity as Kentucky’s existing power plant fleet is modified to comply with (greenhouse gas) regulations.
Translation: state officials are thinking about allowing the Kentucky Public Service Commission to allow utilities to charge customers more for electricity to help maintain the coal industry.
It also suggest relaxing some federal air pollution rules.
In a letter to Gov. Steve Beshear, Energy/Environment cabinet secretary Len Peters said the study, called Greenhouse Gas Policy Implications for Kentucky Under Section 111(d) of the Clean Air Act, shows that Kentucky’s generation portfolio will become almost entirely dependent on natural gas “if we do not re-examine state level policy barriers to maintaining a diversified energy portfolio which includes coal.”
How much more expensive to keep coal in the mix?
The study also takes a look at a variety of other energy sources and technologies, including carbon capture and storage. It would cost $5.4 billion to retrofit 22 current power plants in the state to carbon capture and storage, and operating them that way would require using as much as 29 percent of their generation for the CCS process.
It would cost $5.4 billion to retrofit 22 current power plants in the state to carbon capture and storage, and operating them that way would require using as much about 30 percent their generation on the CCS process.
But what doesn’t fully add up to me, however, is that the study makes a case for needing a diverse energy mix. It says the least-cost requirement is helping to diversify that energy mix, which has been more than 90 percent dependent on coal. Yet it is suggesting to do away with that requirement, to give coal an advantage, which would seem to prevent Kentucky ever getting a truly diverse energy mix.
For the record, Dick Brown, agency spokesman, said the study:
… neither advocates nor endorses a particular federal policy option for regulating greenhouse gas emissions. This paper is also not a detailed plan for Kentucky’s response to new federal regulations. It is intended to inform federal and state leaders of the challenges that lie ahead for Kentucky and the opportunities we have to respond effectively.
Stay tuned. Lawmakers gather in Frankfort next month.
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