The2nd meeting of the Special Subcommittee on Energy was held on Friday, August 15, 2003, at 1:00 PM, in Room 131 of the Capitol Annex. Representative Tanya Pullin, Chair, called the meeting to order, and the secretary called the roll.
Members:Senator Robert Stivers, Co-Chair; Representative Tanya Pullin, Co-Chair; Senators Charlie Borders, David Boswell, Paul Herron Jr, Alice Kerr, Vernie McGaha, and Joey Pendleton; Representatives Rocky Adkins, Eddie Ballard, Carolyn Belcher, James Bruce, Buddy Buckingham, Dwight Butler, J. R. Gray, Thomas Kerr, Fred Nesler, Charles Walton, and Brent Yonts.
Guests: Melissa Howell, Kentucky Clean Fuels; Eric Gregory, Ralph Tyree and Barry Mayfield, East Kentucky Power Cooperative; Carol Fraley, Grayson RECC; Tom Dorman, Pubic Service Commission; Ari Geertsema, Center for Applied Energy Research; Kim Nelson, Western Kentucky Coal Association; George Siemens and Carol Pfeiffer, LGE Energy Corporation.
LRC Staff: D.Todd Littlefield and Sheri Mahan.
Representative Pullin welcomed the committee members and asked for a motion on the July meeting minutes. Senator Boswell moved that the minutes be approved. Second by Senator Herron. Minutes were approved by voice vote.
First, Ms. Carol Fraley, president of Grayson RECC, and Mr. Ralph Tyree, program manager for East Kentucky Power Cooperative (EKPC), gave a presentation regarding the use of landfill gas for power generation. Mr. Tyree discussed EKPC’s introduction of green power into its generation mix, and highlighted different landfill gas generation projects in progress by EKPC, when they are expected to go online and how much power they will generate. He discussed in detail the Green Valley Landfill project, which is being constructed in cooperation with Grayson RECC.
In response to Senator Boswell, Mr. Tyree explained the requirements for a potential landfill gas generation site. He stated that both active and closed landfills can be used, but typically a landfill needs to be at least five years old, with a million tons of solid waste in place, to generate adequate methane for generation purposes.
Representative Gray asked if confined livestock feeding operations can be used as a supply of methane for generation. Mr. Tyree replied that yes, livestock methane can be collected and used for generation purposes and several states are conducting research into tapping that source of fuel.
Senator Stivers asked why landfill gas is considered renewable, and what is the potential for landfill gas generation. Mr. Tyree stated that landfill methane is considered renewable because of the continuous stream of solid waste into the landfill. This type of fuel for generation is considered a biomass fuel, which is renewable.
Mr. Tyree stated that it will never replace coal burning generation plants and renewable energy production will only be supplemental in their electricity mix.
Senator Stivers then asked what the legislature could do to encourage alternative energy research. Mr. Tyree stated there is not a lot of federal grant money or incentive dollars available for research. He stated that Eastern Kentucky University has been working with a dairy operation investigating the potential for collecting the methane for generation purposes.
Senator McGaha asked about the well life expectancy in a solid waste facility. Mr. Tyree stated it depends on what part of the landfill they drill into and the age of the landfill.
Senator Boswell stated there has been extensive research done in alternative generation by the universities in Kentucky. The state needs to take a look at its energy policy. It would be beneficial to the committee to find out exactly what research has been done, to prevent duplication of efforts.
Representative Gray asked at what point the solid waste in a landfill ceases to produce methane. Mr. Tyree replied that much depends on how wet or dry the gas produced is, but generally about twenty years. Some can last as long as forty years.
Representative Pullin stated that the chairmen would put together a letter to the universities asking for information regarding their energy research to date.
Next, Mr. Tom Dorman and Mr. Bob Amato from the Public Service Commission (PSC) addressed the east coast blackout. Mr. Dorman stated the PSC contacted the regulated utilities hours after the black out occurred and they reported that none suffered any outages. LG&E and KU stated those utilities noticed a small “blip”, but no outages occurred, but the PJM system suffered significant outages. He briefly explained how the black out most probably began, discussing the interdependency of the generation and transmission system in that region. The PSC feels that Kentucky was not affected because this state has very balanced generation and consumption, is not dependent on importing power from other areas, and is not highly interconnected with that region. Mr. Amato briefly explained the technical aspects of how a black out can cascade.
Mr. Tom Dorman and Dr. Ari Geertsema of the University of Kentucky Center for Applied Energy Research discussed the history and activities of the Kentucky Energy Policy Board (KEPAB). Mr. Dorman stated that the purpose of the board was to develop a long-term energy plan for Kentucky. He gave an overview of the creation of the board and its mission statement, its organization and membership. He stated that the board arose out of the influx of proposed independent power producers into the state, and the Governor’s moratorium on new plant construction. He briefly discussed the role of the Natural Resources and Environmental Protection cabinet and the PSC in investigating new plant construction and gave an overview of the findings of both agencies. He discussed the findings of the board’s subcommittees. Mr. Dorman then discussed Senate Bill 257 of the 2002 General Assembly, which set guidelines for power plant siting, and outlined its requirements. Finally he stated that KEPAB issued a draft report in December of 2002 outlining its findings, and that this report can serve as a foundation for further investigation and discussion.
Mr. Geertsema provided a history of the work of the board and the drafting of the preliminary KEPAB report. He stated he felt the drafting of the report was premature and that neither KEPAB nor the subcommittees have approved the report. He then outlined how he envisions making future progress in creating an energy policy for Kentucky’s future growth.
Next, Mr. Kim Nelson of the Western Kentucky Coal Association discussed that organization’s view of the use of petroleum coke (petcoke) in generation fuel stock and its effect on the coal industry. He provided a definition of petcoke, described how it is used and stated that petcoke is replacing coal as a fuel in some generation facilities. He stated the utilities use petcoke in an effort to keep fuel costs low, but they do not consider the far-reaching impacts that its use may cause to the Kentucky economy. He then outlined the potential economic impacts to the state and its coal industry. He then discussed the necessity of researching the various effects of petcoke use, and the possibility of taxing petcoke to make up for these adverse economic impacts.
Senator McGaha asked if there is data regarding how much petcoke is used by Kentucky’s electric utilities. Mr. Nelson responded that the PSC has information regarding petcoke use by the regulated utilities, but there is no data regarding its use in merchant plants.
Finally, Mr. George Siemens and Ms. Carol Pfeiffer of Louisville Gas and Electric (LG&E) discussed that company’s use of petcoke at West Kentucky Energy as a supplemental fuel. Ms. Pfeiffer advised where the company acquires its petcoke stock, discussed the physical characteristic of petcoke, and provided a comparison between petcoke and coal. She stated the burning of petcoke by West Kentucky Energy has lowered air emissions and provides less ash waste. She outlined the handling of their petcoke stock, and discussed the crushing and burning of petcoke as compared to coal. Ms. Pfeiffer ended her presentation by discussed the company’s perceived benefits of using petcoke as a supplemental fuel stock.
Senator Herron asked how long West Kentucky Energy has been using petcoke. Ms. Pfeiffer replied that they were approved to use petcoke in 1998, in a 70 percent coal to 30 percent petcoke blend at two generation facilities.
Representative Adkins asked how much petcoke is bought by West Kentucky Energy each year. Ms. Pfeiffer stated on average they could burn about 1.4 million tons, but the company did not buy petcoke until July of 2003 because the price was higher than purchasing a high quality, high sulfur coal from the western Kentucky coal fields. Representative Adkins then asked for the average price of petcoke. Ms. Pfeiffer replied that on average, petcoke costs about $19 per ton delivered per their contract and about $30 per ton, non-contract purchases.
Being no further business, the meeting was adjourned at 3:45 p.m.
All meeting materials and cassette tapes of the meeting are available in the Legislative Research Commission library.