State energy policies reviewed by legislative panel

From the Kentucky Legislative Resource Commission

FRANKFORT—Kentucky’s energy policies have created what state officials say is the largest investment in energy efficiency in the state’s history. Kentucky Deputy Commissioner of Energy Development and Independence John Davies told the Special Subcommittee on Energy that policies born from legislation passed by the Kentucky General Assembly over the past several years have led to substantial investment in energy efficiency in public schools and state buildings, including over $27 million for energy management in public schools statewide.

In 2008, only 17 schools in the state were certified by Energy Star—a federal program that distinguishes a building as highly energy efficient, Davies said. Today, 105 schools are Energy Star certified.

“It’s by no mistake that energy efficiency is the first strategy in the governor’s (energy) plan,” Davies said.

The energy plan, unveiled in 2008, focuses on seven strategies: improving energy efficiency; fostering renewable energy; sustainably increasing production of biofuels; developing a coal-to-liquid industry; increasing natural gas supplies; initiating carbon capture and sequestration projects; and examining the use of nuclear power to generate electricity in Kentucky.

Another show of Kentucky’s energy efficiency policy’s success is the Commonwealth’s distinction of being the only state with two near net-zero energy user schools: Turkey Foot Middle School in Kenton County and Richardsville Elementary in Warren County. Davies said Turkey Foot’s kilowatt usage for May-June was a negative 2,000 kilowatt hours.

State buildings are being made more energy efficient through assistance by the Green Bank of Kentucky, a state program that provides low interest revolving loans for energy efficiency projects and contracts. Davies said $14 million in federal Recovery Act funds provided capital for the revolving loan fund.

“As these loans are repaid, the funds will be recycled to support new energy saving performance contracts in state facilities,” said Davies.

Another success story is the Energy Star appliance rebate program of 2010, which Davies said provided over $3.4 million in rebates to over 34,000 Kentuckians on $51 million in appliance sales. The sales generated $3 million in sales tax revenue, with clothes washers and refrigerators being the most popular purchases.

Having a more diverse energy portfolio—or more diverse ways to generate power—could also benefit the state, which Davies said now relies on coal-fired power for 94 percent of electricity generation.

“In the future, primarily relying on one power of electricity may not be prudent,” he said, adding that regulatory and other pressures will place new demands on the coal industry and the coal it exports to other states.

Kentucky exported around 74 percent of total coal produced here to other states in 2009, he said. Most of those states were in the Southeast.

“These are the same states that will be affected by the federal EPA regulations that may damper their demand for imported coal,” said Davies, who then explained how biomass, biofuels, clean coal technologies and other energy sources are being used to benefit the state.

“We have made a strong start, but there is much more to do,” he said.

Several lawmakers asked officials from the state Energy and Environment Cabinet what the Executive Branch’s position is on federal regulatory changes affecting Kentucky’s coal industry. Senate Majority Floor Leader Robert Stivers, R-Manchester, said the coal industry’s economic impact on Kentucky is at least three times greater than the impact of the horse industry, which is known as Kentucky’s signature industry.

“Last time I looked at the statistics on coal we had over $5.5 billion in sales, which is greater than the total economic impact of the horse industry, so if you do an equivalent multiplier, we probably have close to a $15 billion impact in this state and I would suggest it is probably higher than that,” Stivers said.

Karen Wilson of the Energy and Environment Cabinet said the administration has sent letters, testified before Congress and sued the U.S. Environmental Protection Agency to show “displeasure” with its policies, including a lawsuit filed last year on the EPA’s permitting policies affecting coal mining.

“We would like to see some sensible time frames for the various regulations that are either coming out now or are going to be coming out,” said Wilson, including regulations concerning greenhouse gases and coal ash.

Some lawmakers voiced concern that non-elected officials at a federal agency—namely the EPA—are effecting environmental policy on coal, which remains a dominant energy source nationwide.

“I think many of us believe and are concerned…they are legislating on their own,” said subcommittee Co-Chair Sen. Brandon Smith, R-Hazard.

“It’s a problem when an agency snubs its nose at Congress…,” said House Majority Leader Rocky Adkins, D-Sandy Hook. “It’s not their job to make the law.” Adkins said “common sense” regulations are needed, not regulations that will negatively impact the economy and jobs.

Senate President Pro Tem Katie Stine, R-Southgate, asked Cabinet officials about progress toward meeting the goals of 2010 Senate Bill 132, a bill filed by Sen. Stine and passed into law that supports construction of energy efficient schools.

“I would hope that you would take this legislation seriously, and that you would seek to work with (the Department of Education) to implement it, and also find private entities or federal funds, if there are any…to help in the funding mechanism in that legislation in order to move these schools forward.”