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Kentucky Lawmakers Urged to Consider Innovative Approaches to Energy Policy

The policy arm of a statewide Democratic group has issued its recommendations for Kentucky’s energy future.

The Commonwealth Institute for Policy Issues and Civic Engagement—CPI for short—is part of the Women’s Network. CPI has existed for five years, and occasionally publishes papers about issues pertinent to Kentucky. Earlier this month, the organization released a white paper laying out an energy plan for the state.

CPI Energy Committee Chairwoman Lane Adams said the group is adding its voice to others who are urging more diversification in a state that’s traditionally relied on coal.

“We would hope that adding our voices to the other groups that have expressed similar concerns about our reliance on a fuel that is definitely limited and getting more expensive, that we could bring about some change,” she said. “We’ve made a number of suggestions—proposals, if you will—and hope that some of those might be implemented.”

Some of the report’s main policy recommendations:

    Energy efficiency: The report suggests updates to building codes and increasing energy efficiency tax credits. At a minimum, the authors said the state should adopt Energy Star building codes and requiring all new schools and public buildings be “net zero” facilities. Also, it said state government should fund energy audits and weatherization projects on private homes and buildings.
•    Renewable energy: The report pushes for a renewable portfolio standard in Kentucky, similar to the bill that’s been introduced for the past four years by state Rep. Mary Lou Marzian, a Louisville Democrat, but not gained much traction. The group would also like to see net metering in Kentucky, which allows people with renewable energy systems to sell power back to the grid.
•    Economic development: The report’s authors argue for a percentage of coal severance tax money to be set aside for economic development in the coalfields. Several of these “future funds” have already been set up in energy-rich states, including Wyoming and West Virginia.
The group also recommends doing away with—or at least redefining—the role of the “least cost” provision in decisions by the Kentucky Public Service Commissioners. The PSC makes its decisions about whether to approve or reject utility projects based partly on whichever option is the most reliable and the least cost to ratepayers.

But CPI Chair Col Owens said more factors need to be considered when the PSC looks at the cost of various energy options.

“[The commissioners] tend to look at things like cost relating to fuel, to building generation plants, to distribution systems and those kinds of things,” Owens said.

“They traditionally have not included in their regulatory analysis what are called ‘externalities,’ which are costs that are associated with energy production, energy distribution and energy use but are not typically covered in their process. For example, impacts on health in the community. Impacts on the local economy. Impacts on jobs. Impacts on revenue.”

There’s one time that the legislature has given the PSC permission to deviate from that “least-cost” statute: it passed a bill two years ago that allowed the commissioners to approve a biomass plant in Perry County and consider the project on merits other than cost. (Though, as the Kentucky Center for Investigative Reporting found, there were numerous issues with that project.)

Owens said the least-cost standard isn’t laid out in statute, but the commissioners believe that redefining it should involve the General Assembly.

“And they believe, and I think, quite frankly, not wrongly, if you’re going to depart from that these are major sorts of policy questions,” Owens said.

“For example, what are the desired outcomes?  Where do you draw the lines? And who should pay for them? So, those are policy considerations and decisions that the commission believes are appropriate for the legislature and not for them as a regulatory agency.”

The whole report is available online here.