The 5th meeting of the Special Subcommittee on Energy was held on Friday, November 21, 2003, at 10:00 AM, in Room 131 of the Capitol Annex. Representative Tanya Pullin, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Robert Stivers, Co-Chair; Representative Tanya Pullin, Co-Chair; Senators Charlie Borders, David Boswell, Ernie Harris, Paul Herron Jr, and Vernie McGaha; Representatives Rocky Adkins, Carolyn Belcher, James Bruce, Buddy Buckingham, Dwight Butler, Bob DeWeese, Lonnie Napier, Fred Nesler, and Charles Walton.
Guests: Dr. Ari Geertsema, University of Kentucky Center for Applied Energy Research, Thomas Ward, Donald Malone, and William Renner, EnviRes LLC; Jacob Williams and Roger Walcott, Peabody Energy; Joshua Bills, Appalachian Science in the Public Interest; Scott Richards, Council of State Governments; Eric Gregory, East Kentucky Power Cooperative; Wayne Dinkerley; Jerry Wright; Andri Kukas, Kentuckians for the Commonwealth; T.K. Flanery, Warco Engineering; Don Colliver, University of Kentucky; R. D. Cobb, STC; and Tom Lowery.
LRC Staff: D.Todd Littlefield, Tanya Monsanto, and Sheri Mahan
Representative Belcher moved that the minutes from the previous meeting be approved as written. Second by Senator Boswell. Minutes were approved by voice vote.
Dr. Ari Geertsema of the UK Center for Applied Energy Research outlined coal incentives in other states for the committee. He provided a brief background regarding the development of coal incentives in other states. He then discussed non-coal incentives, including incentives for renewable energy projects and efficiency improvements. He outlined the coal severance tax in various states, including Colorado, North Dakota, Ohio, Wyoming, and West Virginia. He stated that Illinois and Pennsylvania do not have a coal severance tax. He then provided details of various state's coal production and incentive programs, including Illinois, Kentucky, North Dakota, Ohio, West Virginia, and Wyoming. Dr. Geertsema stated that Ohio, Illinois and North Dakota have the most aggressive programs to promote coal and energy industries, which has contributed significantly to the promotion of their own coal industries. He stated that the two states who produce more coal than Kentucky, Wyoming and West Virginia, do not directly support large scale coal research and development. He stated that energy and technology research and development can become drivers for economic growth, which with the right implementation could become a meaningful component of Kentucky's economic progress.
Representative Belcher asked how much of Wyoming’s coal production do they export. Dr. Geertsema replied that almost all coal mined in Wyoming each year is exported to other states.
Representative Buckingham asked what keeps Kentucky from aggressively marketing their coal and coal technologies. Dr. Geertsema replied that, in general, Kentucky’s lack of leadership in the energy sector results in poor marketing efforts. Senator Boswell discussed the need for leadership in this area and the need for reinstatement of an energy cabinet. Representative Bruce moved for a resolution to be passed by the committee asking Governor Fletcher to reinstate an energy cabinet. Representative Belcher seconded the motion. Motion carried by voice vote.
Next, Dr. Geertsema discussed the technology of coal gasification. He provided the committee with a background in the technology and described the process of coal gasification. He provided examples of operating coal gasifiers in the United States and discussed its extensive use worldwide. He listed uses for the gas (syngas) produced by the process. He discussed the advantages and disadvantages for using syngas, including the positive environmental benefits and the difficulties securing financial backing because of lack of confidence in the technology.
Mr. Thomas Ward, Mr. Donald Malone, and Mr. William Renner from EnviRes LLC then gave a presentation regarding their patented HyMelt coal gasification process. They discussed the development of the new gasification process, and its basic concepts. They provided a detailed description of how the process works and discussed the companies pilot project in Catlettsburg, Kentucky and large-scale tests conducted in Sweden. They discussed the benefits of the process, including hydrogen production and collection and emission improvements. Finally they discussed the benefits this new technology will have for Kentucky, including lowering electricity production costs, a new hydrogen production industry, and almost zero emissions.
Representative Pullin asked how the process could be used to produce automotive fuel. Mr. Malone replied that the hydrogen and carbon monoxide could be used to produce automotive fuels, lubricants, and diesel fuels.
Representative Adkins discussed the importance of national energy independence and how this technology can aid this endeavor. He then asked if this technology could be utilized economically so it can be used competitively with traditional energy generation methods. Mr. Malone replied yes, this technology could be implemented competitively.
Next, Mr. Jacob Williams and Mr. Roger Walcott from Peabody Energy discussed coal by wire and how it can increase coal usage. Mr. Walcott stated the importance of a sound energy policy for Kentucky, including improvements to the transmission system and expanded utilization of coal fueled power generation facilities, and the benefits of increased coal usage to a strong Kentucky economy. He predicted a 45% increase in electricity usage over the next 20 years. With increased coal fueled capacity and improved transmission, Kentucky can take advantage of this increase and export electricity out of state, benefiting Kentucky’s economic growth. He stated that transportation of electricity is far more cost effective than rail transportation of coal. He outlined the Thoroughbred generation facility project, discussing project costs, projected plant capacity, clean coal technologies which will be used in the facility, projected job creation, and economic impact of the project. He discussed how new generation using clean coal technologies will improve emissions in general. He discussed the major impediments to coal by wire, including an underdeveloped transmission system. He discussed the lack of high voltage lines within the state, which impedes export of electricity. He stated that enhancing the transmission system would be of economic benefit not only in providing ease of electricity export, but allowing electricity flow through the state and the gleaning of transmission usage fees associated with that traffic. He then discussed how enhancements to the transmission system could be achieved, including incentive programs in other states for generation and transmission investments.
Representative Buckingham asked if Peabody Energy has a plan or recommendations regarding needed transmission improvements. Mr. Walcott stated they did not have a specific plan, but several groups are studying the issue including the Midwest Independent System Operator (MISO).
Finally Mr. Joshua Bills of Appalachian Science in the Public Interest discussed net metering. He defined net metering, and stated that it allows small renewable energy systems to connect to the utility grid. Electricity produced by the independent generator can flow back into the utility grid, spinning the existing meter backwards and net excess generation during a billing period is credited to that generator’s future bills. He discussed the need for a standardized protocol for connecting independent generators onto the grid to ensure safety and power quality. He stated that this system enables green power generators to promote renewable energy use in the state. He discussed the net metering pilot programs by Berea College Utilities and Union Light and Heat Power Company, and the current net metering program used by the Tennessee Valley Authority.
Ms. Andri Kukas from Kentuckians for the Commonwealth discussed the importance of net metering and the need for net metering legislation to be implemented by the state.
All meeting materials are available in the Legislative Research Commission library.
Being no further business, the meeting was adjourned at 12:45 p.m.