The moratorium on power-plant permits Governor Patton imposed in June highlights Kentucky's intelligent approach to energy policy
- an approach that provides the state with the lowest electric rates in the nation.
When the nation's rapidly changing electricity market produced 24 proposals to build power plants in Kentucky, Patton stopped accepting applications until the state could prepare for so many construction projects. The goal of getting prepared began with studies by the state Public Service Commission and the Department of Natural Resources. With the completion of those studies last year, the legislature will now use the information to pass laws that keep power plant growth under control.
There are two reasons for this careful approach. Both result from the fact that most of the 24 proposals don't come from electric utilities in Kentucky wanting to serve their customers. Instead, these plans to build
"merchant plants" come from entrepreneurs hoping to make money selling power to the highest bidder.
One of the reasons to be careful is that merchant plants are not regulated for rates, siting, or impact on transmission lines the way utilities are regulated. The other reason is that merchant plants would probably sell most of their electricity out of state. That raises the question of how much Kentuckians should suffer from the negative impacts of the plants.
The Public Service Commission and Natural Resources reports each run more than 150 pages, but make a few essential points:
The environmental impacts of the merchant plants will likely be manageable, partly because many of them will be
"peaking plants" that operate mainly during times of highest electricity use.
Steps should be taken to avoid overloading the electric transmission system in the state. Existing high-power transmission lines can handle moving electricity to Kentuckians, but are not designed to ship lots of electricity from merchant plants in Kentucky to customers outside Kentucky.
Since most of the benefits of the electricity from merchant plants will be to customers out of state, Kentuckians should not have to pay to reduce environmental and other effects.
The legislature is now taking the next step - considering legislation to make sure Kentucky preserves its admirable low-cost position. It all adds up to a process that continues to benefit Kentuckians with reliable and affordable energy.
Kentucky Association of
Electric Cooperatives, Inc.
4515 Bishop Lane * Louisville, KY 40218
502-451-2430 * FAX: 502-459-3209 Terms of Use
