Special Subcommittee on Energy


Minutes of the<MeetNo1> 4th Meeting

of the 2004 Interim


<MeetMDY1> September 17, 2004


The<MeetNo2> 4th meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> September 17, 2004, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Tanya Pullin, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Robert Stivers, Co-Chair; Representative Tanya Pullin, Co-Chair; Senators Charlie Borders, David Boswell, Ernie Harris, Alice Kerr, Vernie McGaha, and; Representatives Royce Adams, Eddie Ballard, Carolyn Belcher, Dwight Butler, Bob DeWeese, Thomas Kerr, Fred Nesler, Tom Riner, Brandon Smith, Charles Walton, and Brent Yonts.


Guests:  Eric Gregory, EKPC; Ronn Robinson, Kentucky Power; Catherine Ball, GOAP; Rayetta Boone, KDA; Roy Prince, Dar Mangim, and Ron Brown, KDE; Lona Brewer, Kentucky PACE; Hart Moore and Dennis Griffin, Griffin Industries; Joe Yates, US Army-Fort Knox; Cindy Sprague, Gerry Hayden, Jack Trumbo, Linda Dickerson, Darrell Dickerson, Becky Hicks, Debbie Ellis, Jaime Morgan, Andy Sprague, and Randy Mann, KSA; Don Walker, KCSA; Greg Copley, KBEAP; Cynthia Lee, APCD; Jesse Mayes, KYTC; Jeff McGough, Midwest Terminal; David Clagg, CCBE; and Todd Barlow, Kentucky Corn Growers; Bryan Alvey, KFB; and Karen Reagor, Kentucky NEED Project.


LRC Staff:  D.Todd Littlefield, Tanya Monsanto, and Rhonda Carter


Chair Pullin gave the members a brief update on Representative Bruce's medical condition and mentioned the plans for the upcoming October field trip to northeast Kentucky. She then introduced Melissa Howell of the Kentucky Clean Fuels Coalition and John Davies of the Division of Energy. Ms. Howell, then introduced a number of guests in the audience, including representatives of Kentucky Corngrowers Assoc., the Kentucky Soybean Association, Griffin Industries, Kentucky Crushed Stone, the Division of Transportation, the Dept. of Education, the National Environmental Education Program, East Kentucky Power, the Kentucky Soybean Board, and the Environmental Affairs office of Fort Knox, among others.


The preliminary portion of Ms. Howell's presentation dealt with the different kinds of alternative fuels and the size of the role they play in the energy equation. Senator Boswell suggested a link between increasing ethanol use and decreasing fuel prices and asked whether the petroleum industry might be seeking to discourage ethanol use by that pricing strategy. Todd Barlow of the Kentucky Corn Growers Association reported that Kentucky has seen a major improvement in production and that the phaseout of MTBE has been beneficial. Senator Boswell mentioned the frequently-heard charge that making ethanol consumes more energy than it produces. Mr. Barlow and Mr. Davies both replied that this has been disproved and that the ratio of energy used to energy produced is 1 to 1.34. Chairman Stivers asked what emissions or by-products were the result of ethanol combustion and Ms. Howell responded that carbon monoxide and nitrogen oxides are produced but at levels lower than those of petro fuels. Stivers inquired about the burning of 100% ethanol and Howell said there was none of which she was aware. Stivers asked about the cost of production and Barlow answered about $1.40 per gallon.


Representative Yonts asked about hybrid electric vehicles. Ms. Howell answered that GM will market an HEV truck that is 15% more efficient and will get 17 or 18 mpg. Senator Borders asked why the previous Ashland ethanol plant failed and Barlow replied that it had to do with the high price of corn and their relatively high cost of production.


Senator Harris asked about the downside of ethanol. Ms. Howell replied that when corn prices drive ethanol above the price of gasoline, users must pay more and also that there is some reduction in mileage when burning E85. In response to a follow-up question, Barlow said that there is no price difference between gasoline with or without the addition of 10% ethanol. Representative DeWeese noted that gas prices in areas not in attainment with air quality standards seem to be 6 to 10 cents higher than elsewhere, but Barlow reiterated that E10 is not adding to the price of gasoline at the pump.


The presentation then moved on to biodiesel. Ms. Howell noted that the first retail outlets in Kentucky to offer a biodiesel blend in place of pure petro diesel began pumping the blend recently. Use of biodiesel in the crushed stone industry and in school busses is on the rise. Chairman Stivers asked if any plans exist to develop biodiesel refining in southeast Kentucky. Ms.Howell said that the lack of CMAQ funding in areas that do not have air quality problems makes a southeast hub unlikely. Stivers followed up with questions concerning cost of use and performance. Howell responded that there is some initial replacement of fuel filters required when using blends above 20% because biodiesel's solvent properties clean out deposits in the fuel system. She also pointed to the use of biodiesel by Carmeuse Lime Mines in all their heavy equipment as evidence that no reduction in horsepower results from the use of biodiesel.


Representative Smith asked about the effect of blending on octane and on cold-weather handling. Dennis Griffin responded that cetane is actually increased, depending on the feedstock from which the biodiesel is made. He also stated that no changes in cold weather handling are necessary in blends of 20% and below. Representative Smith asked if anyone is pursuing known technologies for making fuel from coal. Howell said no.


Representative Riner asked why diesel was the predominant consumer vehicle fuel in Europe but not in the US. Griffin responded that, because of much higher fuel cost, Europeans have long focussed on efficiency, resulting in more diesel, more manual transmissions and smaller engines.


Senator Boswell introduced Gerry Hayden, a soybean farmer from west Kentucky. Mr. Hayden observed that farmers do not want to replace petroleum as a fuel but only wish to assist the US in becoming more energy independent by providing supplemental fuel.


Senator Boswell moved that the minutes of the last meeting be approved and Representative Belcher seconded. The motion passed by a voice vote.


Chair Tanya Pullin introduced the next presenters. Mr. Greg Pauley of AEP introduced Mike Mudd, Manager of Generation Technology. Also introduced was Holly Koeppel, new Executive Vice President of AEP Utilities East. Mr. Mudd provided an overview of coal-burning technologies for the generation of electricity, focussing on Integrated Gasification Combined Cycle (IGCC).


Senator Boswell offered his wish that more federal funding be directed toward development of new technologies so that they might be exported to help other countries reduce emissions. Senator Harris asked how potential federal reductions in allowable mercury emissions would affect IGCC.  Mr. Mudd replied that the engineering was quite difficult but that activated carbon introduced into the bed would remove mercury.


Representative Ballard commented that a planned gasification plant in his district had been derailed by political change. Chair Pullin inquired about the disposal of waste solids left from IGCC operations. Mudd replied that the solids are non-toxic and can be disposed of in the landfill. Sulfur can be marketed either as elemental sulfur or as sulfuric acid.


Being no further business, the meeting was adjourned.


All meeting materials and a tape of the meeting are available in the Legislative Research Commission Library.