A new study says Kentucky ratepayers could save billions of dollars through 2050 if electric utilities invested more in renewable energy and energy storage, retired “uneconomic” and aging coal-fired power plants, and avoided overbuilding natural gas-fired power.
The 65-page study, published Thursday and written by the consulting firm Current Energy Group, also says two Kentucky laws passed by the General Assembly in recent years restrict the retirements of aging coal-fired power plants and could “reduce or eliminate potential savings and lock Kentucky into a higher-risk, fossil-fuel-dependent future.”
The report was commissioned by the environmental legal groups Kentucky Resources Council and Earthjustice along with the Berea-based Mountain Association and the Louisville-based Metropolitan Housing Coalition.
Ashley Wilmes, the executive director of Kentucky Resources Council, during a press briefing Thursday said her group wanted an “unbiased” study to challenge assumptions embedded in Kentucky laws passed in recent years “that moving forward with cleaner energy is more expensive and less dependable.”
“Here in Kentucky, coal was the least-cost way to produce electricity, but as our coal plants age and as the cost of renewable energy continues to fall, that’s simply no longer the case,” Wilmes said. “Continuing to rely on aging, uneconomic power plants simply leads us to less stable, less dependable and higher-cost electricity when compared to the other pathways that are modeled in our report.”
Using an open source electricity planning model, the report analyzes four pathways that Kentucky utilities could take. The analysis considered pending proposals to build new power plants and other planning documents filed by utilities. It found the least-cost pathway creates up to $2.6 billion in savings for ratepayers through 2050 by replacing coal-fired power with “clean energy resources,” primarily solar power paired with batteries to store the power.
The report also analyzes the impacts of Kentucky laws — Senate Bill 4 in 2023 and Senate Bill 349 in 2024 — passed by the GOP-controlled legislature that impose barriers to retiring fossil fuel-fired power plants. The laws define “dispatchable” energy in ways that limit utilities’ ability to replace coal-fired power plants with anything other than natural gas-fired power, the report says.
In 2024, Senate Bill 349 also created a commission that reviews requests from utilities to retire fossil fuel-fired power before such a request reaches the Kentucky Public Service Commission, the state’s long-time utility regulator. Republican lawmakers who supported the laws generally cited the need to maintain coal-fired power because of electricity reliability fears after Winter Storm Elliott in 2022. Those concerns conflicted with testimony from executives with Kentucky’s largest utility showing coal-fired power plants had significant failures during that winter storm.
Tony Curtis, the executive director of the Metropolitan Housing Coalition, during the press briefing said there are “real housing, economic, environmental and health consequences for low and fixed-income households because of the policy path enacted by the Kentucky legislature.”
“Households may have to devote more of their working time to pay these bills during the hottest parts of the summer or the coldest parts of the winter, when the danger of a missed payment and utility disconnection is heightened,” Curtis said. “It is clear that Senate Bill 4 and Senate Bill 349, do not create safer, more stable, affordable or resilient households across the Commonwealth.”
A spokesperson for the Republican caucus in the Kentucky Senate did not immediately have a response Thursday afternoon to the report’s findings.
Going forward with plans and requests that utilities have already filed with the Public Service Commission could pose significant financial risk if natural gas prices significantly increase or carbon dioxide emissions from plants are more heavily regulated in the future, the report says. Kentucky utilities have recently proposed and received approval to build billions of dollars of new natural gas-fired power plants to largely meet projected power demand from prospective data centers.
Byron Gary, an attorney for the Kentucky Resources Council, pointed to the price volatility of natural gas after the outbreak of the war between Ukraine and Russia as an example of how global markets can impact the fuel. He said while there is upfront investment to build renewable energy such as solar farms, the long-term operating cost tends to be lower and is a known quantity unlike natural gas prices.
“This is that sort of market dynamic that you face when you put all of your eggs in one basket that also requires you to keep paying over time,” Gary said. “We could build instead resources that, once they are built, we know how much they are going to cost to run.”
The report also criticizes shortcomings in the long-term planning process of utilities, stating Kentucky utilities “continue to favor large, capital-intensive fossil fuel projects that align with the older resource-planning paradigm of a slower-moving industry.” This is despite, the report authors wrote, a “faster pace of changes” in the electricity industry that are providing new solutions and reducing technology costs.
Gary said he hopes the report can be a “first step to pointing out a more comprehensive alternative for the future” to avoid paying billions of dollars more because of shortcomings in the long-term planning of utilities. He compared energy planning by utilities to turning a ship.
“It’s a big ship, so making a hard right turn is difficult,” Gary said. “But I still maintain some hope that this is a good first step, just pointing out an alternative future.”
This article was originally published by the Kentucky Lantern.
