The 1st meeting of the Interim Joint Committee on Agriculture and Natural Resources was held on Wednesday, January 29, 2003, at 10:00 AM, in Room 149 of the Capitol Annex. Senator Ernie Harris, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Ernie Harris, Co-Chair; Representatives James Gooch, Co-Chair, and Roger Thomas, Co-Chair; Senators Paul Herron Jr, Robert Leeper, Vernie McGaha, Virgil Moore, Joey Pendleton, and Elizabeth Tori; Representatives Rocky Adkins, Adrian Arnold, Sheldon Baugh, Scott Brinkman, James Bruce, Dwight Butler, James Comer, Howard Cornett, Tim Couch, Jimmy Higdon, Thomas McKee, Brad Montell, Fred Nesler, Don Pasley, Marie Rader, Dottie Sims, Brandon Smith, Jim Stewart, Ken Upchurch, Susan Westrom, and Brent Yonts.
Guests: Randy Dials, Eric Gregory, Judy Border, Barry Mayfield, and David Labude, East Kentucky Power; Becky Naugle, Kentucky Small Business Development Council; David Sparrow and Dr. Richard Coffey, University of Kentucky; Ron Zantz, Pro-Tek Environmental Management Inc.; Lyle Cobb, Cobb and Assoc.; Steve Mims and Rick Onders, Kentucky State University; Ellen Benzing, Kentucky Department of Fish and Wildlife Resources; David Speinhonan, Big Rivers; Harvey Mitchell, Kentucky Department of Agriculture; Gay Dwyer, Kentucky Retail Federation; Bryan Alvey, Kentucky Farm Bureau; Libby Marshall, Municipal Electric Power Association of Kentucky; and Bruce Williams, Kentucky Conservation Committee.
LRC Staff: Dan Risch, Biff Baker, D. Todd Littlefield, DeVon Hankins, and Kelly Blevins.
Chairman Harris began the meeting by introducing and welcoming new members to the committee.
Next, Senator Dick Roeding explained SB 6, AN ACT relating to vehicle emissions. This bill would require officially registered vehicles to be VET tested every two years instead of every year. SB 6 will be brought before the 2003 Regular Session Senate Agriculture committee in the near future.
Next, Mr. David Sparrow presented to the committee Guidelines for Validating 4-H/FFA Market Animals. Mr. Harold Workman, President of the Kentucky State Fair Board and Exposition Center explained that in December 2001 the Fair Board approved DNA testing of market steers, lambs, and hogs as a better means of identification in livestock shows. Mr. Workman was asked to defer implementing these guidelines to 2003 in order to inform prospective participants of the new guidelines. Mr. Sparrow explained that the new guidelines were compiled by a committee, of which he is the chair, consisting of members from vocational schools, extension offices, and other concerned parties. Dr. Richard Coffey, University of Kentucky, explained that under the new guidelines a sample from the animals will be obtained from those entered in district level contests and then another from those animals that proceed on to the State Fair competition (a copy of these guidelines are on file in the LRC Library). Dr. Coffey commented that these guidelines play a role in enhancing the credibility of market shows. Commissioner Billy Ray Smith, Department of Agriculture, stated the guidelines will provide credibility for shows.
Chairman Harris then stated that the integrity of youth shows holds a great deal of importance to him, he stated it was important to maintain the credibility of these shows. He further stated that these shows are an important means of teaching young people.
Mr. Workman then described a particular incident where an animal that won at the State Fair level was protested as being a different animal from that which won at the district level. The protest was filed after the show giving no opportunity for DNA testing.
Chairman Harris inquired about penalties in instances where the protest went against the defendant. Mr. Sparrow replied that disqualification would be an appropriate penalty and Mr. Workman added that each case would be subject to appropriate discretion.
Senator Pendleton commented that the children who participate in these contests are not the problem. Senator Pendleton also asked why goats are not included in the DNA testing.
Mr. Workman responded that no money premiums are paid for goats at the State Fair.
Representative Pasley expressed appreciation to those involved in preparing the new guidelines.
Representative Stewart summarized prior testimony from Commissioner Smith, pointing out that Commissioner Smith and Mr. Sparrow were appointed to the committee which reviewed the case previously described by Mr. Workman. Representative Stewart asked Commissioner Smith, if he thought the winning animal at the State Fair level was the same animal that had won at the district level. Commissioner Smith replied, in his opinion it was not.
Senator Paul Herron asked whether this was an isolated case or whether the Fair Board had knowledge of similar incidents. Mr. Workman responded that to his knowledge this is the first incident of this kind. Senator Herron then asked why tattoos were not used as a method of ensuring animals were not switched. Mr. Sparrow responded that tattoos can be altered.
Next, Chairman Roger Thomas presented the final report of the Subcommittee to Study the Feasibility of Establishing a Kentucky Farm Museum. The committee accepted the report. Chairman Thomas then presented the final report on The Implementation of Reservoir Ranching Resolution HJR 210. The committee accepted the report. Finally, Chairman Thomas presented the committee with the Annual Report of the Small Business Development Center.
Chairman Gooch invited Mr. Greg Pauley, Mr. Steven Baker, and Mr. Tim Mosher of American Electric Power (AEP) to the table. Mr. Pauley shared AEP's coal purchasing policy which requires that AEP obtain an adequate supply of coal from reliable suppliers at the lowest delivered cost. Mr. Baker gave an overview of AEP's coal purchasing factors, which include: requirements, price, and risk management. Unit design, plant location, applicable emission limits, and projected needs are requirements AEP focuses on when purchasing coal. Prices depend on several factors, which include: purchasing from 'local' Kentucky sources when possible; delivered quality; long-term, short-term, and spot mix prices; and expected coal market conditions. Finally, producer reliability, producer financial status, and producer default are important in the role of risk management. A copy of all information is on file with the LRC Library.
Next, Mr. Van Needham, Mr. Dan Rimstidt, and Mr. Mike Gribble from Cinergy/ Union Light Heat & Power presented their coal procurement considerations. Mr. Rimstidt explained that they first look at the coal quality and its compatibility with the equipment design of the station in which it is to be burned. Next, Cinergy looks at factors such as, whether the supplier can ship the amount and quality requested. Finally, they take into consideration the cost of the coal, compared to other sources of supply that meet the same criteria.
Representative Brad Montell noted Cinergy is using 13% Kentucky coal currently and asked if that percentage is increasing or decreasing. Also, he asked where they received the remaining percentage of coal.
Mr. Rimstidt responded that the 28 million tons mostly comes from Indiana and Illinois where power plants are located. Coal has also been received from Pennsylvania, Kentucky, Ohio, and West Virginia. Cinergy has five plants located on the Ohio River enabling them to access a variety of coal, purchasing from coal producing states that are able to transport by barge. Kentucky has a lot of coal lines and reserves that can economically and reliably get to the river that can be used in their system. Cinergy is now consistently using between 3 and 4 million tons of Kentucky coal. A copy of this presentation is on file in the LRC Library.
Finally, Mr. George Siemens, Ms. Carole Peiffer, and Mr. Greg Cantrell representing Louisville Gas and Electric made presentations to the committee. Mr. Cantrell explained that like an individual investment portfolio, LG&E diversifies their coal purchases to reduce their risks. He explained that their 'portfolio' included long-term contracts, those of a one year duration; short-term contracts, less than one year; diversity of suppliers; and transportation diversity. LG&E's bidding process is an open process and transparent to bidders, providing a range of quality and quantity. LG&E purchases seven to eight million tons of coal annually. Most of the coal purchased has a high sulfur content. Mr. Cantrell reported that for the 2002 year 66% of this coal was produced in Kentucky. Kentucky Utilities purchases seven to nine million tons of coal annually. In 2002, 3.9 million tons of this was compliance coal, 0% of which came from Kentucky; 1.7 million tons was low sulfur, 98% of which came from Kentucky; and 1.8 million tons of high sulfur coal; 22% of which came from Kentucky.
Mr. Cantrell went on to explain their commitment to providing the lowest possible price for their customers, and thus explaining their need for fuel diversity. He explained that in order to achieve the lowest possible cost they must use a 'fuel mix', referring to the use of coal and natural gas. A copy of this presentation is on file in the LRC library.
Finally, Eric Gregory, Barry Mayfield, and Randy Dials, representing East Kentucky Power made a presentation to the committee. Mr. Dials explained that East Kentucky Power's (EKP) fuel buying practices mirror those of AEP, Cinergy and LG&E in their fuel solicitation, fuel evaluation of ash content, sulfur content, and heat content. Since 1999, EKP has increased the amount of coal they have purchased in Kentucky by 9%. Mr. Dials then described the Gilbert Plant, a new facility being built in Maysville, Kentucky. Mr. Dials explained that this new plant will burn roughly 1.2 million tons of coal beginning April, 2005. It will be the cleanest coal fired plant in the United States. And he also explained that their purchases of Kentucky coal should increase in the next few years because of the new facility, which will likely burn a minimum of 70% of Kentucky coal.
The meeting adjourned at approximately 1:30 p.m.