LG&E and KU will continue to monitor activities taking place at the federal level and all further legal developments relating to the Clean Power Plan. In March 2017, the President issued an executive order directing EPA to review all proposed and final rules relating to greenhouse gas reductions including the Clean Power Plan. Until all administrative reviews and judicial proceedings are complete, it is unclear how the plan or any future replacement rule might impact the state of Kentucky or our future operational plans.
At the time when the Clean Power Plan was first proposed, the company identified five key issues for the EPA to address:
Minimize economic and customer impacts
As regulated utilities, LG&E and KU are required by the KPSC to provide reliable energy at the lowest reasonable cost, while complying with environmental laws and regulations.
The company strives to minimize impacts for customers, and current proposed regulations would undermine state and local economies.
The Kentucky Energy and Environment Cabinet has projected that a 10 percent increase in Kentucky electricity prices could result in a $2 billion decrease in the state’s gross domestic product and a loss of 30,000 jobs in the energy-sensitive manufacturing sector.
It is critical, particularly for manufacturing states like Kentucky, that the EPA strongly consider the economic impacts of these regulations because Kentucky has found coal-fired electricity to be a competitive advantage in attracting and maintaining energy-intensive industries and the jobs that they bring.
Require reasonable, realistic guidelines and timetables
When considering the lifespan of any changes to an energy supply fleet, the EPA must provide a practical timeline to allow states and utilities to make prudent decisions in order to comply with regulations.
The EPA should allow for flexibility and give states and utilities the ability to customize the methods used to meet clearly outlined emission limits.
The EPA must revisit its assumptions about coal-fired power plant operations, energy efficiency and the lack of technologies available to effectively and economically capture and store carbon dioxide on a commercial scale. The current models used to develop emission targets are flawed and would significantly impact utilities’ future use of coal-fired generation.
Preserve a diverse fuel mix that includes a future for coal
Natural resources and the availability of fuels to generate electricity vary from region to region. Kentucky is not blessed with an abundance of wind or sun, and the area’s main renewable resource — water — is not acknowledged by the EPA’s rule.
Meeting the current rule would require importing renewable energy from outside of Kentucky, potentially creating electric reliability issues. In order to provide long-term reliable, affordable energy, there must be a diverse national supply of fuel sources.
Utilities are burning coal more cleanly than ever before, as a result of increasingly more stringent regulations. Coal-fired generation remains, to date, an economical and reliable source of electric power in Kentucky and elsewhere in the nation.
Protect grid reliability
The EPA’s current regulations could cause additional coal-fired unit retirements, generating reliability concerns for the electric grid and Kentucky.
The current regulation does not properly account for an interconnected electric grid or how emissions are impacted when units are working together to power the grid.
Widespread changes to the nation’s generating units raise significant concerns about how this would impact existing transmission systems.
Fully credit existing efforts that reduce CO2 emissions
The company has taken actions that reduce CO2 emissions and believes utilities should be fully credited for existing efforts.
The company is fully rehabilitating all eight generating units at the Ohio Falls hydroelectric plant that will increase total output by 27 percent. Ohio Falls and Dix Dam hydro plants will have the ability to produce up to 120 megawatts.
The investments we’ve completed at our power plants to further reduce emissions, coupled with our new Cane Run 7 unit, will also help us meet carbon reduction requirements under the Clean Power Plan or any new rule that may replace it.
We’re actively evaluating potential technologies and supporting research projects to propel the availability of carbon-capture technology, commercial-scale battery storage, renewables and more efficient coal-burning methods.
We are hopeful that EPA will consider these concerns in the course of its review of proposed and final rules.