Special Subcommittee on Energy


Minutes of the<MeetNo1> 3rd Meeting

of the 2015 Interim


<MeetMDY1> August 21, 2015


Call to Order and Roll Call

The<MeetNo2> 3rd meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> August 21, 2015, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Representative Gerald Watkins, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jared Carpenter, Co-Chair; Representative Gerald Watkins, Co-Chair; Senators Joe Bowen, Ernie Harris, Jimmy Higdon, Dorsey Ridley, Brandon Smith, Johnny Ray Turner, and Robin L. Webb; Representatives Rocky Adkins, Hubert Collins, Leslie Combs, Tim Couch, Will Coursey, Jim Gooch Jr., Thomas Kerr, Jerry T. Miller, Sannie Overly, Tom Riner, Dean Schamore, John Short, and Fitz Steele.


Guests: Ms. Melissa Howell, Executive Director, Kentucky Clean Fuels Coalition; Mr. Chris Perry, President and CEO, Kentucky Association of Electric Cooperatives; Mr. Scott Gentry, Kenergy Project Chairman and Vice President, Kentucky Association of Electric Cooperatives; Mr. Jonathan Grove, Cumberland Valley Electric and Kentucky Association of Electric Cooperatives; and Mr. Jim Petreshock, Owen Electric and Kentucky Association of Electric Cooperatives.


LRC Staff: D. Todd Littlefield, Janine Coy-Geeslin, and Kelly Blevins, Committee Assistant.


The minutes for June 19, 2015, and July 17, 2015, were approved, by voice vote, upon motion of Representative Hubert Collins and seconded by Representative Leslie Combs.


Transportation Technologies Across the Bluegrass

Melissa Howell, Executive Director, Kentucky Clean Fuels Coalition (KCFC), gave an update of ongoing alternative fuel projects in Kentucky. Ms. Howell testified about private companies and local government entities changing their fleets to liquefied natural gas (LNG) and compressed natural gas (CNG). Examples include M&M Cartage, Lexington-Fayette Urban County Government, AT&T and UPS. E-Z Pak is a company in Cynthiana that is manufacturing cement haulers and refuse trucks to use CNG. There are seven operational CNG fueling stations in Kentucky with two under construction and five proposed. Not all CNG stations are available for public use. There is one operational LNG station in Walton and one waiting for an anchor fleet in Georgetown.


Ms. Howell provided an update on the various types of fuel being used by private companies and government entities. E85 is available in Louisville, Lexington, Elizabethtown, Frankfort, and other Kentucky locations. Crittenden County did a pilot project with the Department of Education using a propane school bus that saved approximately $5,300 in fuel for one year. There are approximately 30 propane powered school buses in operation in Kentucky. Sixty-five more buses will be ordered in September. Propane powered vehicles are also used by Mammoth Cave National Park and Schwan’s Company. There is a Biodiesel (B20) plant in Owensboro, Kentucky. Griffin Industries, Anheuser-Busch, UPS, and Carmeuse Lime Mines have been using biodiesel trucks. About 5 percent of all diesel sold in Kentucky has a biodiesel component. The Kentucky Clean Fuels Coalition partnered with LG&E/KU to buy Volts (all electric vehicles). TARC in Louisville has 15 all electric Proterra buses that can recharge their batteries in 3 minutes; Lextran has ordered five buses. Zenith Motors is building electric shuttle vans. Mammoth Cave National Park is installing four electric recharge stations which will be solar powered. There are 103 personal electric vehicles in Kentucky, and most recharging stations are at dealerships.


Ms. Howell provided an update on energy projects in Kentucky. Five projects had been approved by the Kentucky Cabinet for Economic Development for the Incentives for Energy Independence Act program. Owensboro Community and Technical College was awarded $745,602 in grant funds from the National Science Foundation to develop a curriculum for training students to work on alternative fuel and regular fuel engines. Thus far, 208 students have completed the program. The University of Louisville (U of L) is developing an energy school, a National Science Foundation program. U of L will be the anchor school and will partner with other schools outside Kentucky to establish a national research center to develop, advance, and apply technologies for improving energy efficiency and environmental sustainability of ground vehicles.


In response to Representative Collins, Ms. Howell said propane is ideal for light duty vehicles and buses. The best return on investment for heavy duty trucks is with natural gas. Ms. Howell said Kentucky is not collecting road tax on totally electric vehicles.


In response to Senator Carpenter, Ms. Howell said regional haulers cannot afford to put in infrastructure to support their fleet. Heavy duty fleets can help with regional haulers. Small business fleets have incentives in other states. Ms. Howell said she would provide the members information regarding incentives in other states.


In response to questions from Representative Miller, Ms. Howell said the Jefferson County Public School system is not moving to propane, but it has 50 hybrid electric buses. She did not know why the system is not moving to propane. E85 vehicles are 15 to 25 percent less efficient.


In response to Representative Combs, Ms. Howell said as part of a hybrid electric bus project, a female driver in Pike County doubled her miles per gallon with her bus. She did not know if Pike County had ordered any propane buses.


Representative Riggs reported his experience with his E85 truck was very positive. There are many people who do not know they can use gasoline or E85 flex fuel in their vehicles.


In response to Representative Collins, Ms. Howell said that a propane gas bus costs about $22,000 more than a gasoline bus. However, with a $5,200 fuel savings, the return on investment is about 4 years. School buses are retained by school districts for about 14 years.


Cyber Security Framework for Electric Cooperatives

Chris Perry, President and CEO, and Scott Gentry, Vice President, Kentucky Association of Electric Cooperatives (KAEC), presented a report on Cyber Security Framework Proposal for Electric Cooperatives. There are 24 distribution electric cooperatives that are not regulated because they do not have generation assets. The Public Service Commission (PSC) received a grant and did a study on how distribution cooperatives were dealing with cyber security issues. Guernsey, a consultant, was hired to do an analysis of cooperatives’ policies and procedures for cyber security. The cooperatives are developing protocol and procedures for dealing with cyber security. They found that the largest risk for a breach of cyber security was the employees of the cooperatives.


Mr. Gentry presented the Cyber Security Framework proposal. He said that Guernsey looked at six Kentucky electric distribution cooperatives of the 24 in the state. Areas of focus included 21 areas of cyber issues such as IT risk management, password parameters, personnel security, remote access and many more. The subcommittee worked with PSC to develop a framework, a package of policies, controls, and best practices to disseminate to the cooperatives throughout the state. ISO 27001 was the framework used by the subcommittee because it was used in the Guernsey study.


Mr. Gentry said the subcommittee came up 25 policies dealing with open source best practice IT policies and controls, Cyber Security Employee Awareness & Training Program, Cyber Security Achievement Program, and sample cyber security procurement language and questions. The proposed framework is not a fully complete cyber security program. The subcommittee did not intend for the framework to be a one size fits all. He said that additional work is necessary for defined IT procedures, disaster recovery plan, PCI compliance policies and plan, and FACT Act Red Flags Rules Policies and Plan. Cooperatives are different sizes with different staffing levels. The proposed framework is not mandatory, but all IT members in attendance are planning to adopt a formal program.


Mr. Gentry said they are providing a source document to establish a formal cyber security program. This was an open source document that the subcommittee revised to meet the needs of the cooperatives. Sans.org was a significant source for program policy development. Mr. Gentry said that the Continuous Employee Training Program was recommended to keep cyber security current threats in front of the employees. Kenergy has already adopted this program. Employees go through training modules once a month. The Kentucky Cyber Security Achievement Program is a recommendation for cooperatives to come together and do a self-assessment program. A group of IT representatives from the cooperatives would go to a cooperative, do a high level review of their cyber security programs, and make recommendations. Mr. Gentry stated that when using outsourced information processing, there is a recommendation that appropriate cyber security language be placed in third-party outsourcing agreements. Language may include indemnification and liability assignment, requirements to provide adequate access controls, and an audit clause or requirement to provide an independent compliance report such as an SSAE 16. Mr. Gentry also said that the subcommittee recommended that cooperatives have a formal cyber security program in place and provide documents to help them develop a strong program. However, if a cooperative already had a program in place, the subcommittee recommended using the documents as additional resources to enhance their cyber security program.


Mr. Gentry said that the subcommittee had received requests for the proposed framework from the National Rural Electric Cooperatives Association, the Department of Homeland Security and other states’ cooperatives. Kentucky is being nationally recognized for the subcommittee’s work on cyber security.


In response to Representative Riner, Mr. Perry said they are working with homeland security and FBI to prevent terrorist attacks on infrastructure.


In response to Representative Schamore, Mr. Gentry said IT personnel are always worried about hackers.


In response to Representative Collins, Mr. Perry said all of the cooperatives are participating and sharing information about cyber security. Mr. Gentry added that cyber security is not free due to added security walls but that is the cost of doing business to protect their infrastructure. He said any business that has customer data has to protect that information and has the same issue.


In response to Representative Combs, Mr. Gentry said hackers are constantly trying to infiltrate their firewalls at Kenergy, but he does not know of any cooperative in Kentucky that has lost data.


In response to Representative Schamore, Mr. Perry and Mr. Gentry agreed that without IT security, power would cost more and the level of service would be lower.



There being no further business, the meeting was adjourned at 11:30 a.m.