Special Subcommittee on Energy


Minutes of the<MeetNo1> 3rd Meeting

of the 2013 Interim


<MeetMDY1> September 20, 2013


Call to Order and Roll Call

The<MeetNo2> 3rd meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> September 20, 2013, at<MeetTime> 9:00 AM, in the Quad Room, Brown Badgett, Sr. Energy and Advanced Technology Center, Madisonville Community College, Madisonville, Kentucky<Room>. Senator Jared Carpenter, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jared Carpenter, Co-Chair; Representative Richard Henderson, Co-Chair; Senators Ernie Harris, Dorsey Ridley, and Robin L. Webb; Representatives Dwight D. Butler, Tim Couch, Will Coursey, Jim Gooch Jr., Tom Riner, John Short, Fitz Steele, Gerald Watkins, and Brent Yonts.


Guests:  Rusty Ashcraft, Manager of Government Affairs and Environment Policy, Alliance Coal; Dave Moss, Vice President and Director of Governmental Affairs, Kentucky Coal Association; David Clardy, Vice President, Matrix; Gary Whisman, Executive Director, Kentucky Coal Academy; Danny Knott, Director of the Mine Rescue Team, Kentucky Coal Academy; and Rick Caskey, Director of the Fire Brigade, Kentucky Coal Academy.


Legislative Guest:  Senator Jerry Rhodes.


LRC Staff:  D. Todd Littlefield, CSA, Janine Coy-Geeslin, and Susan Spoonamore, Committee Assistant.


Future of Western Kentucky Coal

Dave Moss, Vice President and Director of Governmental Affairs, Kentucky Coal Association, spoke to the issues affecting western Kentucky coal since 2000, specifically citing the Clinton Administration imposing more stringent air quality regulations on utilities. Mr. Moss posited that new technologies such as air scrubbers have allowed western coal companies to keep up with federal regulation. Mr. Moss provided statistics on production of eastern Kentucky coal versus western Kentucky coal. In 2012, 54 percent of Kentucky’s total coal production came from western Kentucky, and 46 percent came from eastern Kentucky. In 2013, Union County surpassed Pike County as the leading coal producing county. Mr. Moss maintained that western Kentucky coal is still prosperous. He wondered if the same problems eastern Kentucky coal companies are facing will come to western Kentucky coal companies.


Rusty Ashcraft, Manager of Government Affairs and Environment Policy, Alliance Coal, stated that Alliance is the first and largest publicly-traded master limited partnership involved in the production and marketing of coal. It is the third largest eastern coal producer with 34.8 million tons produced during 2012. As of December 31, 2012, Alliance had 920 million tons of reserves. Alliance has thirteen mining operations along with other projects and has 2,400 employees in Kentucky. Mr. Ashcraft said that the 2012 estimate of the economic impact from Alliance’s Kentucky operations totaled $1,039,000. About 94 cents of every $1.00 stays in Kentucky. There are 3.6 billion people who have no or only partial access electricity.


Access to electricity improves quality of life, which enables people to live longer and better. Electricity consumption in the United States has grown 54 percent since 1990, and America’s economy is powered by coal. The supply of coal is abundant, and the demand for coal should remain stable. Using coal as a fuel source in Kentucky helps keep the state’s electricity rates among the lowest energy rates in the United States.


Representative Steele noted that over 560 coal mining jobs have already been lost in eastern Kentucky, which is preparing for the loss of another 200 jobs. James River has coal cars it cannot move.


In response to Representative Steele, Mr. Ashcraft said that when natural gas rates start rising it will cause a perfect storm of natural gas versus coal prices.


Representative Couch stated that billions of dollars in coal severance tax money have been paid to the state. He recommended that part of the coal severance money be put in trust to help communities affected by the loss of jobs.


Representative Webb said it was hard to be optimistic about coal. Regulations are a problem for both eastern and western Kentucky. Mr. Ashcraft responded that maybe eastern Kentucky, with the help of technology, will figure out how to deal with federal regulations.


Representative Gooch said that the federal Environmental Protection Agency will eventually go after all fuels.


Innovative Mining Techniques and New Proximity Detection Technology

David Clardy, Vice President of Matrix, explained that Matrix is a wholly owned subsidiary of Alliance Coal. Alliance Coal recognized the need for safer mines and asked that Matrix develop safety devices to better protect miners. IntelliZone Proximity Detection (IntelliZone) was developed to help save lives and reduce lost-time accidents with little or no loss in mine productivity. It has reliable underground technology with advanced software to provide the location of personnel and vehicles around the continuous miner. IntelliZone uses two operational awareness zones--a warning zone and a shutdown zone. The warning zone warns workers that they are near a potentially dangerous area, and the shutdown zone is closest to the equipment and causes immediately shut down when a worker enters this area. The zones are programmable.  “Locators” are worn by workers or placed in another vehicle. “Drivers” are placed on the continuous miners. The locators warn personnel if they are too close to equipment, and the drivers shut-down the equipment if personnel wearing the locators enter the shutdown zone. Proximity of zones can be modified based on a variety of programmable inputs, such as speed and direction.


In response to Senator Webb, Mr. Clardy said that the price per kit for the IntelliZone Proximity Detection costs approximately $70,000. Surfacing mining kits are less expensive. He said that there are no health risks associated with wearing the locator devices. The radiation exposure for the devices is similar to holding a radio for eight hours.


Kentucky Coal Academy

Gary Whisman, Executive Director of the Kentucky Coal Academy, stated that he was a coal miner for 20 years. He said that the Academy was established in 2005 by the General Assembly to train and advocate for the safety of coal miners. Since 2005, the Academy has trained approximately 65,000 coal miners, including new and established miners. The Academy features a Mine Emergency Response Academy (MERA), as well as a Fire Brigade program. It also has the largest coal mine simulator fleet in the world. The Academy has three above ground simulated mines. The key to safety is prevention in all aspects of mining. About $2.5 million in scholarships had been awarded to students as part of the Junior Coal Academy. There is an estimated supply of coal to last 250 years. It was also his opinion that natural gas will eventually be regulated just like coal.


 Mr. Danny Knott, Director of the Mine Rescue Team, said that the mine rescue teams are some of the best in the nation. The teams placed first in Kentucky and third in the nationals.


Mr. Rick Caskey, Director of the Fire Brigade, mentioned that the program teaches miners how to fight fires in coal mines.


Senator Carpenter stated that the Academy provided the only coal mine simulator training facility in Kentucky and the United States.


Representative Henderson said that eastern Kentucky and western Kentucky need to work together in speaking out and being proactive in preserving the coal industry.


Representative Steele acknowledged former Representative Fred Nesler. He commented that industries surrounding coal are suffering due to the loss of coal jobs.


Representative Webb pointed out that there are female coal miners who have lost their jobs as well as their male associates. Representative Webb added that coal jobs have provided opportunities for education for women too.


The meeting was adjourned at 12:00 p.m. CST.