The KY Public Service Commission (PSC) issued a landmark decision on November 6 in a case brought by Louisville Gas & Electric and Kentucky Utilities Company (LG&E-KU). The order will have major long-term impacts not only for LG&E-KU’s ratepayers, but for the future of energy and the environment in the Commonwealth. In the order, the Commission denied construction of one of two proposed gas plants, approved the retirement of two coal plants and three gas plants while deferring retirement of two other coal plants, and approved a major buildout of solar facilities, a utility-scale battery plant, and a significant expansion of customer energy efficiency programs.
The Order approved all six of the utilities’ proposed solar facilities, which at a combined 877 megawatts (MW) will produce enough energy to serve about 90,000 homes. Importantly, the Commission approved the solar facilities because of the “significant savings” they would offer to customers. The Commission also approved a 125 MW battery, another landmark development, as this will be by far the largest utility-scale battery in Kentucky. The Commission noted the essential role batteries could play in the ongoing energy transition in Kentucky as utilities shift away from fossil fuels to cleaner renewable resources.
The Mountain Association, Metropolitan Housing Coalition, Kentucky Solar Energy Society, and Kentuckians for the Commonwealth, who collectively intervened in the case, were disappointed with the Commission’s approval of a new natural gas plant and choice to keep two aging coal plants open. However, the order offers major advances for clean energy in Kentucky and indicates that the PSC is weighing the risks of new and existing fossil fuel plants pose to ratepayers.
The new multi-billion dollar gas plant will be paid for by ratepayers, the same ratepayers who were left in the dark and cold last winter when gas and coal-fired power plants failed during Winter Storm Elliott. For years, activists have been calling for utilities to invest more heavily in renewable and efficiency programs to avoid just this situation, with little response. LG&E-KU must not ignore this opportunity to ramp up efficiency programs, solar energy, and battery storage to make any additional gas plants unnecessary.
This was the first case considered by the Commission since passage of Kentucky Senate Bill 4 earlier this year, a bill aimed at making it harder for utilities to retire old coal plants. The new statute requires utilities to receive approval from the PSC before retiring fossil fuel generators. The ruling provided the first indication of how the Commission would implement the statute.
“The denial of a $650 million, 40 year commitment to a risky natural gas plant is a major victory for ratepayers,” said Catherine Clement of Kentuckians for the Commonwealth. “And the closure of those old Mill Creek coal units will mean better air quality for the people of Louisville and the surrounding region.”
“LG&E-KU had wanted to retire four coal plants because they are too costly to operate and require massive investments to bring them into compliance with air and water quality regulations,” said Josh Bills of the Mountain Association. “Although the Commission decided to keep two of these old coal plants open for the time being, they established a pathway for how such plants can be retired in the future. Importantly, they noted that the success of customer efficiency programs and the growth of distributed energy resources (like rooftop solar) could reduce demand enough to allow these coal plants to be retired without costly new replacement fossil fuel generation in the years to come.”
“We are excited to see the expansion of the utilities’ customer efficiency programs,” said Tony Curtis of the Metropolitan Housing Coalition. “We look forward to collaborating with the utilities to help make these programs a great success for their customers, especially those who struggle to pay their bills each month and can really benefit from home energy improvements.”
“This Order is a major victory for clean energy in Kentucky,” said Andy McDonald of the Kentucky Solar Energy Society. “LG&E-KU proposed the largest-ever build-out of solar in Kentucky and the Commission approved their entire proposal because it will improve reliability and lower costs for customers.”
Chris Woolery of the Mountain Association said, “Successful energy efficiency programs can save enough energy to offset the need for new power plants and that’s the lowest cost solution for customers. But it takes time to ramp up energy efficiency programs, so utilities need to make their efficiency plans before they start planning for the next generation of power plants. While we are pleased that LG&E-KU are rolling out these new efficiency programs, there’s so much more they could do. In ‘Pay As You Save’ programs, the utility invests in energy upgrades in customer’s homes and businesses. The investment gets paid back through the utility bill, while the customer enjoys home improvements and lower bills. I’m grateful the PSC has approved the utilities’ new efficiency programs and I urge them to embrace a PAYS program as a means to make these new programs a greater success.”
The joint intervenors were represented in this case by the Kentucky Resources Council and Earthjustice, who each provided pro bono legal representation.