December 21, 2007

Pushing energy policy: Can this new session help free Kentucky from coal?

The New Year will bring opportunities for Kentucky to mold an energy policy influenced more heavily by the future than the past. Calls for a change in energy supply and use have seemed thus far doomed, but a study under way by the state Public Service Commission is intended to help the agency, and ultimately the legislature, understand how to navigate a changing energy landscape.The study, mandated by as part of House Bill 1, the controversial energy legislation passed in this summer’s special session of the General Assembly, will examine how the PSC’s policies toward public utilities might hinder a reduction in the state’s carbon emissions. The results are due in February.Along with two other studies — a recent carbon study from the Governor’s Office of Energy Policy, and an efficient housing study also due early next year — it should guide Kentucky toward a smarter energy policy, one that doesn’t involve new coal-fired power plants. It also signals a recognition that the issue comprises more than the hyperbolic struggle between naive tree huggers and coal goons. Impending national energy policy will hit everyone in the wallet, smacking Kentucky even harder than most places, and even industries that profit enormously from the carbon economy have pushed in recent years for clear federal restrictions. The urgency comes not as much from ecological concern as from economic insecurity inherent in developing technologies while ignorant of how laws might change in coming years.It’s clear, however, that carbon restrictions are coming, and while about 50 percent of the rest of the nation’s power comes from coal, in Kentucky it’s more than 90 percent. Federal emissions laws will significantly affect anyone in the state with a light switch or a penchant for a warm home during cold winters, so PSC is taking what spokesman Andrew Melnykovych called “a more holistic approach” to calculating energy costs, from environmental and health to disposal costs. The old way of simply subtracting capital investments from profits won’t cut it anymore. “It’s abundantly clear on everybody’s part that the environment is changing in many ways,” he said, adding that political and economic climates will also change with the weather. He said the cheap coal-fired electricity that makes Kentucky so attractive to industry might have to come from other sources in the future. “If we want to maintain those economic advantages, we need to get to ahead of those kinds of changes,” said Melnykovych. Through the study, PSC will consider how its policies can encourage greater energy efficiency on the consumer end, energy diversification by suppliers, or even decentralized plants.Energy demand is also rising to prominence in a discussion normally framed by supply, where “meeting our energy needs” nearly always trumps talk of reducing our energy use. Tom Fitzgerald, director of the nonprofit Kentucky Resources Council, said such dated thinking is currently reflected in PSC’s policies, helping put Kentucky “among the most inefficient states in the way that we utilize power because historically it’s been very inexpensive.”Several parties, including utility companies, were automatically included as “interveners” in the study, parties whose input will be formally included, and Melnykovych said the consultants conducting the study are interviewing business, low-income users and environmental groups. But the Bluegrass chapter of the Sierra Club wants to do more than submit public comments. The group has applied for intervener status, which would allow it to ask questions at the hearing level that would become part of the public record — and put it on the same level as the utilities. The group was denied the status at a hearing on another issue just a few months ago, but representatives feel it has a crucial perspective in this case.“Sierra Club is probably going to take the lead on issues of impacts on human health, and environmental costs,” said spokesman Wallace McMullen. That includes a study showing dramatic rises in the cost of coal-derived power over the next two decades, a statistic that the group hopes will help move industry toward alternatives. The results of studies are not laws, and it remains to be seen how new efforts will translate into legislative action. Fitzgerald, however, says there’s reason for optimism. “I’m very excited about the fact that the PSC appears to be taking this very seriously,” he said, “and beginning this conversation on how we can make our utility and energy policies in the state more environmentally progressive … We’re among the most vulnerable in the whole country.” Contact the writer at jennifer@leoweekly.com