The next chapter of Kentucky power generation is in the hands of regulators
Louisville Gas and Electric and Kentucky Utilities want to retire seven fossil fuel generating units — four coal and three gas units. State regulators have until Monday to make a decision.
The utilities say coal power has served Kentuckians over the decades, but the units are reaching the end of their useful economic lives, and are no longer cost effective.
Regulators at the Kentucky Public Service Commission (PSC) will decide whether the state’s largest investor-owned utility will be allowed to replace the units with two natural gas power plants, and a smaller amount of solar and battery power.
This is the first time in state history an electric utility is required to receive approval from state regulators to retire fossil fuel generating units. The new requirement stems from a law passed this year that’s designed to make it more difficult to retire fossil fuel power plants.
The law, and the three members’ interpretation of the law will have lasting impacts on the future of power generation in Kentucky. Their decision comes at a critical time for the climate, and the future habitability of the planet.
Republican Sen. Robby Mills of Henderson sponsored the new law as it moved through the Legislature. Mills is now running for lieutenant governor on a ticket with Republican Attorney General Daniel Cameron.
Mills spoke dismissively of the unequivocal evidence of the earth’s warming in a KET debate earlier this week saying “climate change is not as big as it appears to be.” He said that if coal generators were allowed to operate the way they have for the last 50 years, it could lower utility bills.
“The problem is that fossil fuel companies are working against the curve as the federal government pursues an ideological move that we are not ready for,” he said. "We could still use fossil fuels and burn more effectively and burn more economically."
Senate Bill 4 passed both chambers. Democratic Gov. Andy Beshear, who is running against Cameron to stay in office, allowed it to become law without his signature earlier this year.
The new law creates a “presumption against retiring” fossil fuel plants. To overcome the presumption, utilities have to prove:
- it will result in cost savings for customers
- the replacement power maintains or improves grid reliability
- there’s enough power to maintain minimum reserve capacity requirements
- the replacement power is dispatchable
- is not the result of state or federal financial incentives
The law gives the state’s three-member PSC 180 days from the date of filing to authorize or reject the retirements. LG&E/KU filed on May 10, meaning the PSC must issue an order by Monday Nov. 6.
Climate scientists warn we must stop burning fossil fuels to avoid the worst impacts of climate change. The amount of carbon we can afford to put into the atmosphere and still limit warming to below 2 degrees Celsius is dwindling.
But last year, carbon emissions reached a record high. A new study in the journal Nature Climate Change found the planet’s remaining carbon budget is smaller than once thought, and could be used up in as fast as six years at the current rate of emissions.
Dispatchability and customer savings
The law’s emphasis on dispatchability could prove critical to the future of renewable power generation in Kentucky. It will be up to the PSC to interpret what “dispatchable” means under the law.
Some argue that renewable power like solar and wind is not dispatchable because it only works when the resource is available. However, there are an array of technologies including batteries and pump storage (itself a kind of battery), that could allow renewables to be “dispatched” when the electricity is needed.
LG&E/KU have proposed replacing the bulk of the power from the retiring coal units with two natural gas combined cycle plants totaling around 1,240 Megawatts of electricity -- both of which are fully dispatchable, according to PSC records.
LG&E/KU argue in the case filing that their company-owned solar facilities, totaling around 240 MW, plus a 125 MW four-hour battery energy storage system, will be dispatchable.
The utilities also intend to buy around 637 MW of solar power through four purchase agreements, but they said they won’t have “dispatch control” over those facilities.
As for customer savings, LG&E/KU officials said retiring the aging coal units will result in hundreds of millions of dollars in savings when compared with continuing to operate the aging coal fleet.
Correction: A previous version of this story incorrectly stated the types of units to be retired. There are four coal, and three gas units being considered for retirement.