Saturday, June 30, 2001

Ky. facing little say in energy crisis

By Mark R. Chellgren
The Associated Press

        FRANKFORT — Troubled by watching California turn brown, and swamped by requests to build new power plants here, Kentucky policymakers want to get on top of the energy debate.

        But as they learned Friday, Kentucky may be a bystander in much of that debate.

        Natural gas prices are deregulated. A federal agency controls most of the transmission grid that carries electricity. And there are questions about how much control Kentucky has over the 24 requests to build new electric generating plants. Market demands are sending prices on a roller coaster.

        “The states around us are going to dictate a lot of our destiny,” said George Siemens of Louisville Gas and Electric Co.

        “The market is going all over the place, and it's crazy,” said Bill Daugherty of the oil and gas association.

        Gov. Paul Patton created an energy advisory task force, which met Friday, to gather representatives of the utilities, the coal and gas industries, consumers, regulators and environmentalists.

        Mr. Patton said Kentucky is in an enviable position of potentially being able to profit by generating more electricity from its abundant coal resources, but he said there are concerns about environmental costs.

        “These are not opposing goals,” said Natural Resources Secretary James Bickford.

        Most of the 24 requests for new power plants are for those that would burn natural gas, and then only when demand is greatest — perhaps only a few hundred hours a year.

        These so-called peaking generators are not regulated by the Public Service Commission because their power would be sold on the wholesale market.

        But they do have to apply for air and other environmental permits. Mr. Patton slapped a moratorium on new permit requests earlier this month. The moratorium lasts almost to the end of the year.

        A peaking plant to be built by a division of Cinergy Corp. won approval before the moratorium to be built in Kenton County.

        Within air quality guidelines, the Natural Resources Cabinet may not have too much leeway to reject applications without new authority, which will be one of the things the advisory panel explores.

        Tom FitzGerald, director of the Kentucky Resources Council, said the panel should also explore the price of power, its reliability and energy efficiency and conservation.


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