Special Subcommittee on Energy


Minutes of the<MeetNo1> 3rd Meeting

of the 2006 Interim


<MeetMDY1> October 20, 2006


The<MeetNo2> 3rd meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> October 20, 2006, at<MeetTime> 11:30 AM, at Spindletop Hall, Lexington, Kentucky. Senator Robert Stivers II, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Robert Stivers II, Co-chair; Representative Tanya G. Pullin, Co-chair; Senators Walter Blevins Jr, Charlie Borders, Denise Harper Angel, Ernie Harris, and Johnny Ray Turner; Representatives Royce W. Adams, Rocky Adkins, Eddie Ballard, Carolyn Belcher, James E. Bruce, Dwight D. Butler,  Fred Nesler, and Tom Riner.


Legislative Guests:  Senator Tom Buford and Representative Jim Gooch.


Guests: Joe Settles, Supervisor, Natural Resources and Environmental Communications, East Kentucky Power Company; and Melissa M. Howell, Executive Director, Kentucky Clean Fuels Coalition.


LRC Staff:  D. Todd Littlefield, Taylor Moore, Susan Spoonamore, and Kelly Blevins.


Prior to the meeting, members toured the Center for Applied Energy Research.


Minutes of the September 15, 2006 meeting were approved, without objection, by voice vote, upon motion made by Rep. Nesler and seconded by Rep. Adkins.


Sen. Stivers introduced Joe Settles, Supervisor, of the Natural Resources and Environmental Communications program for  East Kentucky Power Company.

Mr. Settles explained that part of his job with East Kentucky Power Company (EKPC) included on-site evaluations where proposed transmission facilities are being considered for construction on right of ways. Under the National Environmental Policy Act, they are required to document archeological sites, historic structures, and rare and endangered species: reptiles and amphibians, spiders, bats, birds and wildflowers of Kentucky. During the winter months they provide educational programs to schools, which include a hands on program with reptiles and amphibians.  


Rep. Adams asked if East Kentucky Power worked in consultation with the Transportation Cabinet when evaluating proposed right of ways.


Mr. Settles stated that any coordination between East Kentucky and the Transportation Cabinet comes through the EKPC engineering staff. From an environmental standpoint, EKPC does not have regular contact with the Cabinet.


Next, Senator Stivers introduced Melissa Howell, Executive Director, Kentucky Clean Fuels Coalition (KCFC). She stated KCFC is finding itself connecting the dots between the private, business, public and government sectors. She said that November will be the most exciting month ever for KCFC. United Parcel Service (UPS) and the Louisville International Airport plan to make a joint announcement that they are moving to biodiesel which she said will be “a phenomenal project”. The Jefferson County School Public School system, which has the 19th largest school bus fleet in the nation, has also decided to move to biodiesel. She said that those three projects alone are a direct result of Marathon putting biodiesel at the Louisville terminal. She stated that it is imperative that biodiesel be put into terminals across the state in order to see other great projects happen in places like Covington, Owensboro, Bowling Green, Ashland, Lexington, and Paducah.


Sen. Stivers asked how much biodiesel was selling for.


Ms. Howell stated that the cost fluctuates, but currently it is 3 cents more than regular diesel for  B20 blend.


Rep. Adkins asked how much it cost per gallon.


Ms. Howell stated that currently it is $2.39.


Sen. Harris asked if vehicle warranties would be affected.


Ms. Howell stated that UPS would start with a B5 blend, which would not affect warranties. 


In continuing, Ms. Howell said that there were a substantial number of heating oil customers in Kentucky using #2 diesel, and some were using B5 biodiesel blend as a supplement to reduce the amount of diesel being used.

She stated that in the near future, the University of Kentucky, Lexington/Fayette Government, the Fayette County School System and LexTran bus and vehicle fleets would be switching to biodiesel blends.

Ms. Howell also noted that biodiesel plant development in Estill, Boone and Union Counties were presently stalled because of failure to meet fuel quality standards. She stated that through a grant from the Governor’s Office of Energy Policy, biodiesel storage and distribution equipment would be located in south eastern Kentucky. She noted that the Commonwealth Agri-Energy Plant in Hopkinsville had expanded to 33 million gallons a year and was looking to expand up to 40 million gallons. The University of Kentucky has some on-going research projects involving corn stover, cellulosic ethanol and BioOil stability for shipping.

She said that Biodiesel plants are under construction in Owensboro and Burlington, with proposed construction of other plants in Shelbyville, Irvine, Morganfield and Fulton. In addition, a biodiesel fuel terminal is proposed for Covington and a storage and distribution plant for south east Kentucky. She explained that starting in 2007,  when a producer or a blender applies for a state tax credit on biodiesel, they will be required to show two separate certificates verifying that they meet  ASTM standard.  Ethanol plants are proposed for Fulton, Louisville, Brandenburg, Logan County and Paducah. She stated that in Western Kentucky there is a huge push for E10 ethanol blend.  Ms. Howell stated that a  distributor was in the process of having ethanol brought in via railroad, that will be distributed to retail places across Western Kentucky.

In conclusion she stated that 15 businesses were qualified to receive the state tax credits.  From those 15 distributors, over 4.2 million gallons of biodiesel was sold.


Rep. Nesler asked how long would it take before consumers would know exactly what grade of biodiesel they were purchasing.


Ms. Howell said that no standards were in place for any blend, except for B100.  She said the standard for the B20 blend could possibly be in place within the next 6 to 8 months.


Meeting adjourned at approximately 12:45 p.m.