Special Subcommittee on Energy


Minutes of the<MeetNo1> 1st Meeting

of the 2010 Interim


<MeetMDY1> June 18, 2010


Call to Order and Roll Call

The<MeetNo2> 1st meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> June 18, 2010, at<MeetTime> 12:00 PM, in<Room> Room 131 of the Capitol Annex. Representative Keith Hall, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Representative Keith Hall, Co-Chair; Senators Ray S. Jones II, Bob Leeper, Dorsey Ridley, John Schickel, Katie Kratz Stine, and Gary Tapp; Representatives Royce W. Adams, Rocky Adkins, Eddie Ballard, Dwight D. Butler, Leslie Combs, Tim Couch, Will Coursey, Jim Gooch Jr., Thomas Kerr, Martha Jane King, Harry Moberly Jr., Lonnie Napier, Fred Nesler, Tanya Pullin, Tom Riner, Fitz Steele, and Brent Yonts.


Guests:  Virginia Carrington, Branch Manager; Todd Trapp, Section Supervisor; and Sharon Vinyard, Policy Analyst, Cabinet for Health and Family Services, Department of Community Based Services, Division of Family Support; Rob Jones, Executive Director and Dan McKenzie, Energy Programs Director, Community Action Kentucky; Matt Partymiller, Solar Energy Solutions; Scott Sykes, Genesis Development, and Susan Carson Lambert, representing Jim Fugitte, Wind Energy Corporation.



LRC Staff:  D. Todd Littlefield, CSA, Taylor Moore, and Susan Spoonamore, Committee Assistant.


Low Income Home Energy Assistance Program (LIHEAP) Block Grant Application for SFY 2001


Virginia Carrington, Branch Manager, Todd Trapp, Section Supervisor, and Sharon Vinyard, Policy Analyst, Cabinet for Health and Family Services, Department of Community Based Services, Division of Family Support, explained the requirements and components of the LIHEAP funds specified in the application.


In response to a question from Rep. Adams, Ms. Carrington said that money could be added to the subsidy for delivery of fuel.


In response to a question from Rep. Adkins, Ms. Carrington explained that weatherization is a separate program.


Upon motion of Rep. Couch and seconded by Rep. Will Coursey the LIHEAP Block Grant Application Findings of Fact, were adopted, without objection, upon voice vote.   


The LIHEAP Block Grant Application Findings of Fact are as follows:


(1)       LIHEAP funds specified in the application have been included in an appropriation provision or a branch budget bill enacted by the General Assembly in anticipation of such application;


(2)       Any excess in the total amount of LIHEAP funds sought over the total amount of such funds anticipated and included in an appropriation provision or a branch budget bill has been included in a surplus expenditure plan approved by the General Assembly;


(3)       A budget reduction plan specifying programs and services to be eliminated or to be reduced in scope if federal funding diminishes or is cut has been included;


(4)       The budget reduction plan does not propose to increase the ratio of state funds to federal funds if federal funding diminishes or is cut;


(5)       LIHEAP funds to be provided under the application are fairly and equitably distributed among those programs, services, or recipients eligible for block grant funding;


(6)       LIHEAP funds to be provided under the application are not to be used to fund programs or services that would duplicate or supplant existing programs or services funded by the private sector;


(7)       The intended uses of LIHEAP funds specified in the application are in compliance with applicable federal and state laws pertaining to such block grant funds; and


(8)       The amount of LIHEAP funds to be retained by the state administering agency for administrative purposes does not exceed an amount allowable under federal law.



Wind and Solar Credits and Incentives: A good deal gets better:

Mr. Matthew Partymiller, Manager, Solar Energy Solutions, LLC, discussed federal solar incentives stating that a 30% commercial tax credit could be taken as a grant through December, 2010.  There is also a 30% installation cost tax credit for residential. Kentucky incentives include a 30% commercial tax credit or $3/watt for solar electric, capped at $1,000, and a 30% residential tax credit or $3/watt for solar electric, capped at $500.


TVA offers “Generation Partners” program with an initial grant of $1,000.  All energy produced by a rate payer (kWh) is purchased by the utility at retail rate plus $0.12/kWh which means that a TVA customer could produce 40% of their energy via solar electric and have a $0 energy charge. TVA would claim ownership rights to all of the Solar Renewable Energy Credits (SREC).


In Kentucky, all non-TVA solar producers are eligible to produce and dispose of Solar Renewable Energy Credits as they see fit.  Mr. Partymiller explained that outside companies known as aggregators have been purchasing Kentucky’s SRECs in five year contracts.  They have also purchased rights to a ten year stream of SRECs for $1,000/kW installed.  He said that much of Kentucky’s solar production is being sold into Ohio meaning that Kentucky will be at a severe disadvantage in event of a Federal Renewable Portfolio Standard (RPS).


Mr. Partymiller stated that Ohio is seeing significant growth in solar due to incentives similar to Kentucky, but with larger caps ($25,000 for residential and $150,000 for commercial). Tennessee offers up to $200,000 for solar projects, and Indiana’s grants are similar to Tennessee.  West Virginia’s grants are also similar to Kentucky except with a larger cap of $2,000.


In conclusion, Mr. Partymiller stated that in order to spur growth of the renewable market, Kentucky must increase the incentives.  In addition to increasing the incentives, it must be coupled with consumer education and remain tied to reputable certification of vendors and installers.


In response to a question from Rep. Hall, Mr. Partymiller stated that Ohio’s average kWh cost is between 10 and 12 cents versus 8 cents for Kentucky.


In response to a question from Rep. Adkins, Mr. Partymiller stated that Kentucky does need to look at its incentives for solar.


In response to a question from Rep. Gooch, Mr. Partymiller stated that KCTCS has shown an interest in training programs for qualified installers.


Mr. Scott C. Sykes, President, Genesis Development of Kentucky, LLC, gave an overview and the implications for Kentucky regarding Federal incentives for wind. Wind energy plays a vital role in the world’s energy markets, with the 2008 market for turbine installations worth approximately $30 billion.  Over 400,000 people are now employed globally, and that number is expected to be in the millions in the future. Wind industry jobs jumped to 85,000 in 2008, which is a 70% increase from the previous year. In contrast, the coal industry employs approximately 81,000 workers.  Wind energy is the only power generation technology that can deliver the necessary cuts in CO2 in the period leading up to 2020.


Mr. Sykes said that the Energy Information Administration predicts that wind, solar, and other green energy sources will be the most rapidly expanding sector, contributing approximately 10% to global supplies.


The United States government has worked to place the U.S. as a global leader in installed wind capacity. Some programs have expired, but the United States is still poised to continue the development of renewable energy projects that will have a definite impact on the local economies where they are located.


In conclusion, Mr. Sykes stated that Kentucky needs to take full advantage of the federal programs in order to diversify the state’s energy portfolio and develop a new industry in the underserved, economically disadvantaged areas of rural Kentucky.


In response to a question from Rep. Gooch, Mr. Sykes stated that the pro-coal movement in rural Eastern Kentucky hinders the ability to collect much needed wind data from the ridgelines.  He estimated that 135 sites had been identified for such projects, but only 5 would work really well. 


Some members agreed that all forms of energy would be needed in the future, and Kentucky has worked hard to be aggressive in pursuing all sources of energy.


Ms. Susan Carson Lambert, Geographer, GISP Earthworks, on behalf of Jim Fugitte, Wind Energy Corporation, briefly discussed on-site renewable energy for commercial customers.  Ms. Lambert stated that the on-site commercial wind energy is a $70 billion dollar market.  She explained that Kentucky should make investment incentives for on-site wind and solar competitive with other states.  Kentucky should also support the establishment of renewable energy companies in Kentucky to bring jobs and technology to the state.


Army Corps of Engineers’ decision to suspend Nationwide Permit 21 in the Appalachian Region

Ms. Sarah Davasher, Strategic Communication, US Army Corps of Engineers, Louisville District, explained that the Nationwide Permit 21 (NWP 21) was suspended on June 17, 2010, in the Appalachian region of six states, including Kentucky.  She said that this would not affect the existing NWP 21 permitting processes.  The current and pending permit applications will be converted to individual permits.  This is not an attack on coal, but it means that the application process will be done differently.  The Louisville District only has 3 pending applications and none of the 3 were completed applications.  The 3 applications will be converted to individual permits and they will be re-prioritized in the already existing individual permits so there will not be a delay in the processing of those applications.


In response to questions by Rep. Hall, Ms. Davasher stated that the Louisville District had 3 applications and those were from Perry, Pike and Johnson Counties.  She said that individual permits would require public scrutiny, but she was not sure how long the public comment period lasted.  Ms. Davasher said she would obtain that information.  She said that modifications cannot be made to an existing NWP 21 permit/application without going through an individual permit process. 


In response to a question by Representative Steele, Ms. Davasher stated that Appalachia was targeted because of specific concerns related to valley fills and headwater streams.


Representative Gooch stated that Army Corps of Engineers used to be highly thought of as experts, not political.


Representative Adkins stated that the biggest issue in the permitting process is consistency, which is not happening.  Even though NWP is a nationwide permit process, it appears that this suspension is only affecting the Appalachia region and is targeting the mining industry. 


Representative Combs agreed that consistency is a problem throughout.  She also encouraged real findings not from public comments.


The meeting adjourned at 2:00 p.m.