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Bills May Spur Cleaner Coal Power Plants

Posted on: Friday, 3 March 2006, 06:00 CST

By Owen Covington, Messenger-Inquirer, Owensboro, Ky.

Mar. 3--FRANKFORT -- Legislators began discussions Thursday of two provisions designed to spur the development of more technologically advanced and environmentally sound coal power plants.

The House Tourism Development and Energy Committee approved House Bill 665 that would remove an administrative hurdle to power plant construction and could help Kentucky land a $1 billion zero-emissions coal-based power plant.

"The effort here is to put us in the best position possible at bidding for that billion-dollar federal demonstration project," said Rep. Tanya Pullin, a South Shore Democrat and the bill's sponsor.

Kentucky is one of about a dozen states that is vying for the FutureGen project, a proposed coal-fueled power plant that would generate electricity and hydrogen from coal with nearly no emissions.

The FutureGen Industrial Alliance, a public-private partnership that is heading the project, will be accepting proposals in May and should select a site by next year.

Andrew McNeill, chief of staff for the state Commerce Cabinet secretary, said the state has already been evaluating potential sites for the plant, and it is possible it could land in western Kentucky if the state is awarded the project.

House Bill 665 would remove the project from the state siting process, but it would still have to be approved by the local planning and zoning commission, McNeill said.

The committee also began discussion on House Bill 585, which would provide more incentives for the construction of clean coal power plants, but which opponents say could drive up energy prices in the short term.

The bill would allow a company that is approved to construct a "clean coal" power plant, which has fewer emissions that regular coal-fired power plants, to raise power rates once they begin construction of the plant.

Currently, the Public Service Commission only allows power companies to recoup construction costs once the plant is operational, which could take as many as four years, McNeill said.

"There are facilities that need to be built," said Rep. Robin Webb, a Grayson Democrat who sponsored the bill. "This bill will hopefully allow that technology in electricity production to proceed with environmental considerations."

The measure would encourage companies to construct more technologically advanced coal-fueled power plants that require a more significant investment than traditional coal-fired power plants, McNeill said.

However, stricter environmental regulations are requiring power companies to retrofit their coal-fired plants to reduce emissions, a process that can be expensive.

"They can go ahead and invest on the equipment on the front end," McNeill said. "It's a matter of pay more now or pay more later for a cleaner environment."

Dave Boehm, a lawyer representing more than 30 industrial groups in the state, said allowing companies to pass along construction costs through rate increases before a new plant is operational will lead to increases of more than 30 percent in rates.

"The bill is intended to radically change about 65 to 70 years of tradition in rate making in Kentucky, rate making that has served Kentucky very well," Boehm said.

Webb said the Public Service Commission will still retain oversight over how much the company can raise its rates, and will review the rate increase annually to ensure it is not excessive.

"The PSC involvement will not change," Webb said. "The criteria is there as a safeguard."

Discussion on House Bill 665 will likely continue next week before the bill is voted on by the committee.

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Copyright (c) 2006, Messenger-Inquirer, Owensboro, Ky.

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Source: Messenger-Inquirer

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