Special Subcommittee on Energy


Minutes of the<MeetNo1> 6th Meeting

of the 2010 Interim


<MeetMDY1> November 19, 2010


Call to Order and Roll Call

The<MeetNo2> 6th meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> November 19, 2010, at<MeetTime> 11:00 AM, at Kentucky Power’s Matthews Service Center, Cannonsburg, Kentucky.<Room>. Senator Bob Leeper called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senators Ray S. Jones II, Bob Leeper, Gary Tapp, and Johnny Ray Turner; Representatives Rocky Adkins, Eddie Ballard, Dwight D. Butler, Leslie Combs, Tim Couch, Harry Moberly Jr., Rick G. Nelson, Fred Nesler, Tanya Pullin, Tom Riner, Fitz Steele, and Brent Yonts.


Guests: Representative John Will Stacy; Jimmy Keeton, Kentucky Power Governmental and Environmental Affairs Manager; Greg Pauley, Kentucky Power President and Chief Operating Officer; Gary Spitznogle, AEP Director, New Technology Development and Policy Support; Mike Williams, Kentucky Power Distribution Dispatch Supervisor, and Everett Phillips, Kentucky Power, Director, Distribution Region Operations.


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


The October 22, 2010 minutes, were approved, without objection, upon motion made by Representative Steele and second by Representative Ballard.


Coal Combustion Residual/Transport Rule Presentation:

Mr. Greg Pauley, President and COO, Kentucky Power, stated that the actions of the U.S. Environmental Protection Agency (EPA) will dramatically impact the future viability of coal generation. He explained the impacts of EPA’s proposed Transport Rule and Coal Combustion Residuals rule on Kentucky and its ratepayers. The Transport Rule will cause rate increases, and will result in plant closings and loss of jobs. Coal-fueled power plants will either be retired or run on a limited basis. When this happens, affected communities will face a significant negative economic impact. The Coal Combustion Residuals rule (CCRs), which includes designating coal ash as a hazardous waste, will have far-reaching and significant financial consequences. Customers served by coal-fired plants will pay billions of dollars more to handle and dispose of coal ash, in addition to already increasing energy costs. The estimated cost to AEP customers will be $3.9 billion by 2020.


Mr. Pauley said that the best option for Kentucky would be the Subtitle “D” prime, which would give the EPA the authority to address individual sites that are out of compliance. It would also be more cost-effective for customers.


When the economy rebounds, another concern will be an inadequate electric grid. He said that investments in the electricity system will require at least $1.5 trillion between 2020 and 2030, assuming no changes in carbon policy or long-term prices. Investments in electric infrastructure will enhance reliability and power quality as well as increase customer choice and control over energy use.


In response to questions from Representative Adkins, Mr. Pauley stated that the Big Sandy Plant is an efficient coal operating plant, and upgrades are estimated to cost approximately $300,000.


In response to Representative Moberly, Mr. Pauley stated that the EPA estimated the costs of implementing the environmental regulations. Mr. Pauley stated that the battle with EPA has to be fought in Washington, not Kentucky.


In response to Senator Jones, Mr. Pauley stated that one must build for the future, including nuclear plants.


AEP Mountaineer Power Plant CCS Project:

Mr. Gary Spitznogle, Director, New Technology Development and Policy Support discussed the Carbon Capture and Storage pilot project. He described the organization’s process and new technologies for storing CO2 .


In response to Representative Moberly, Mr. Spitznogle stated that there is so much clean CO2 that it has to be stored rather than released into the atmosphere.


In response to Representative Stacy, Mr. Spitznogle stated that CO2 can be captured as a gas and compressed into liquid form. It can be converted into a solid but is not stable in solid form. It is easier to pump underground as a liquid.


In response to Representative Moberly, Mr. Spitznogle stated that the organization is working with the Center for Applied Energy Research. It has not received any money from the U.S. Department of Energy.


Mr. Everett Phillips, Director, Distribution Region Operations, Kentucky Power, took committee members to see a live demonstration of hazards to customers, workers, and the system from accidents involving power lines.


Mr. Mike Williams, Kentucky Power Distribution Dispatch Supervisor, discussed the problems associated with copper theft, which is dangerous, expensive, and becoming more common.


The meeting adjourned.