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Utilities: Let There Be Light (and Water and Gas)

How the utility sector is leading the way for Kentucky’s record economic growth

By Jeff McDanald

Kentucky’s economy is booming, coming off the best two years of economic development ever, and Kentucky’s utilities sector is playing a significant role in the growth trend.

If you’re a leading a company looking at expansion, greenfield projects or relocation, you can’t afford not to call on Kentucky’s top-performing and award-winning utilities that are helping businesses navigate the challenges and prosper in today’s business climate.

At first blush, utilities aren’t often seen as a go-to resource for businesses looking to start or expand their operations. Utilities may be viewed as an important, but not crucial, piece of a larger puzzle that might include workforce, related industry presence, suitable sites, logistics and regulatory issues.

However, the players in Kentucky’s utilities sector are often extending their influence into many areas, which is not so remarkable considering the enormous importance of abundant water and affordable electric power for any business.

More than 20% of Kentuckians depend on Louisville Water Co. for drinking water. As a regional provider, Louisville Water partners with other utilities to deliver its product to communities in Bullitt, Hardin, Nelson, Shelby and Spencer counties. Its average production for Louisville Metro and surrounding counties is 124 million gallons daily.

“Our growth in supplying the region with water for industry matches the growth the state is seeing,” said Kelley Dearing Smith, vice president of strategic communications and marketing for Louisville Water. “In 2022, water sales to regional partners totaled nearly 3.2 billion gallons—22% higher than the five-year average.”

“Manufacturing and food/beverage make up the bulk of the economic development requests we receive,” Smith said. “In Louisville, we’re working closely with companies like House Foods, a tofu manufacturer that is adding a facility in Louisville. House Foods needs a large volume of water, and we’re working with the company as it prepares the site.”

Supporting everything from EV batteries to bourbon
Initiatives like Water Grows KY, a campaign launched in 2022 by Louisville Water, highlight water’s value to Kentucky’s signature industries: agriculture, manufacturing, distilling, education and healthcare. The campaign includes video production, speaking engagements and water tastings across the state.

A majority of Louisville Water’s infrastructure improvements and investments are showing up south of Louisville, largely driven by the BlueOval SK Park project in Hardin County—the single largest economic development in state history—and growth of the bourbon industry in Bullitt and Nelson counties.

BlueOval SK’s 5 million-s.f. plant will make electric vehicle batteries for Ford and Lincoln vehicles.

“We have more than $60 million in capital work planned to deliver additional water to Bullitt, Nelson and Hardin counties,” Smith said. “In Hardin County, the site of the Ford investment, we signed a new 52-year agreement with Hardin County Water District #2 to supply up to 11 million gallons of water a day by 2036.”

Hardin County was an existing regional partner, and the new agreement will help the local water district meet the demands of the battery plants now under construction. Meanwhile, a partnership agreement finalized in 2022 with the North Nelson Water District increases the amount of water provided to Bardstown, which has long claimed to be Bourbon Capital of the World and whose distilling industry is experiencing unprecedented growth.

“Because of this regional focus, we formed a coalition in 2022 with water providers and the elected leaders in Nelson, Hardin, Bullitt and Meade counties and we were able to secure $35 million for projects to support this regional growth,” Smith said. This is outlay is separate from the $60 million mentioned above.

Forward-thinking partnerships
Louisville Gas and Electric Co. and Kentucky Utilities (LG&E/KU) are regulated utilities that serve over 1.3 million customers in more than 90 Kentucky counties. Like Louisville Water, the monumental BlueOval SK Battery Park has led the way in the record-breaking surge of new jobs and investment.

The nearly 12,000 new jobs and $8 billion of new capital investment in LG&E/KU’s service territory was instrumental in Site Selection magazine naming them a 2022 United States Top 20 Utility. The numbers represented approximately 72% of Kentucky’s total for investment and 66% of the new jobs announced, according to John Bevington, LG&E/KU director of business and economic development.

The upward trend continued into 2022 with LG&E/KU making more than $3 billion in capital investments and creating nearly 5,200 jobs across their service area.

To support these efforts, LG&E/KU launched OpportunityKY.com to help site selectors and prospects evaluate Kentucky communities as a possible place to grow or locate a business.

Recent forward-thinking partnerships forged by LG&E/KU have supported Summit Polymers’ $37.5 million Lawrenceburg operation with 218 quality jobs and Kruger Packaging’s $114.2 million operation in Elizabethtown with 150 well-paying jobs. An investment of $250,000 by LG&E/KU in Versailles/Woodford County has realized a 118-acre industrial site with rail access.

LG&E/KU’s longer-term energy plan includes retiring 1,500 megawatts—nearly a third—of older coal-fired generation by 2028 and meeting future needs by building two 621-MW natural gas combined-cycle facilities; constructing two 120-MW solar facilities; adding nearly 800 MW of solar generation through power purchase agreements; and constructing 125-MW of battery storage along with 14 new energy efficiency offerings.

Cutting-edge tools
“Our cooperatives use technology and good old-fashioned hard work to cut through the clamor and tell the stories of Kentucky’s communities around the globe,” said Brad Thomas, manager of economic development for Kentucky’s Touchstone Energy Cooperatives, a group of 17 not-for-profit, member-owned electric cooperatives that serve more than 1.1 million Kentucky residents across 87 Kentucky counties.
They are getting results. In 2022, working in partnership with local, state and federal officials, the cooperatives assisted on economic development projects that resulted in announced plans for $2.9 billion in new capital investment and 2,044 new jobs. That’s on the heels of 2021, which saw over $2 billion in investment and more than 2,500 new jobs.

Often, electric co-ops serve areas that are off the beaten path, so Kentucky’s Touchstone Energy Cooperatives have pioneered ways to get those communities in front of site selectors around the globe.

“We use drones to collect data about available industrial sites and then develop videos, detailed site summaries and data files that are marketed anywhere in the world with a mouse-click,” Thomas said.

The co-ops also created the PowerMap app to offer easy access to granular information for site selectors, and the co-ops’ economic development web site, DataIsPower.org, was recently revamped to better showcase Kentucky’s communities.

Their efforts have been lauded in the economic development community as Site Selection magazine named Kentucky’s Touchstone Energy Cooperatives a Top 20 U.S. Utility in economic development.

Upgrading infrastructure
Upgrading infrastructure to improve efficiency and increase reliability is an ongoing process for Kentucky American Water, a subsidiary of American Water. Kentucky American Water is the largest investor-owned water utility in the state, providing services to approximately half a million Kentuckians.

“In 2022 we invested approximately $40 million in water and wastewater treatment and pipeline systems in the communities we serve,” said Susan Lancho, senior manager, external and government affairs. “These investments allowed us to improve water quality, water pressure and service reliability for our customers.”

“These capital investments also generate economic benefit to the local and regional economies by not only supporting existing businesses but by creating jobs, driving innovation and strengthening communities,” Lancho said.

As part of its ongoing water system renewal efforts, Kentucky American Water is wrapping up the rehabilitation of one water storage tank in rural Bourbon County and preparing to begin work on another in Millersburg, for a total investment of approximately $1.6 million.
Crews are completing the rehabilitation of the company’s 750,000-gallon water storage tank on Briar Hill Road and plan to begin work on a 200,000-gallon tank in Millersburg this summer.

Recruiting aerospace
Kentucky Power, headquartered in Ashland, provides electrical service to approximately 165,000 customers in 20 Eastern Kentucky counties. Kentucky Power’s distribution operations work from service centers in Ashland, Hazard and Pikeville and from area offices in Paintsville and Whitesburg.

The Hager Hill Industrial Park in Johnson County is among Kentucky Power’s economic development success stories. Kentucky Power helped the site achieve Build-Ready certification from the Kentucky Cabinet for Economic Development, a designation that indicates that necessary permits—including, water, environmental, archeological and geotechnical studies—are on file, along with preliminary building plans, cost estimates and schedule projections.

The Build-Ready certification led to Johnson County being approved for a Kentucky Product Development Initiative grant facilitating the purchase of property adjacent to the existing park, doubling the size of the industrial park.

Kentucky Power invests about $700,000 a year in similar economic development activities across their service territory.

The Aerospace Alliance of East Kentucky (AAEK) is a partnership of two like-minded economic development organizations, One East Kentucky and the Ashland Alliance, along with the regional utility provider, Kentucky Power. The goal is to recruit aerospace industry to Eastern Kentucky. The work of AAEK has led to this region being certified as AeroReady. The organization seeks to recruit and locate prospective companies to this region while connecting them with low-cost labor, educational institutions, and meaningful incentives.

Part of the recruitment process 
Columbia Gas, which serves 135,000 customers in 30 Kentucky counties, has long-standing relationships with economic development organizations and local governments, said Columbia Gas of Kentucky President and Chief Operating Officer Kimra Cole. That includes regular discussions to identify and address gas infrastructure needs, share market insights, and support local efforts to attract and retain businesses.

Local officials bring Columbia to the table during the recruitment phase.

“Proactively planning and upgrading our infrastructure is critical, so we invest millions of dollars each year in pipeline projects that enhance the safety and reliability of our system,” Cole said. “Columbia Gas actively participates in discussions with companies interested in locating within our area, providing insights on natural gas service availability, capacity and reliability.”

Columbia is preparing for ongoing growth, Cole said, pointing to both the record wins Kentucky has achieved the past two years and the hundreds of millions the state has committed to site development. The gas provider is investing in resilience, reliability, exploring sustainable energy sources and staying forward thinking in its stance.

“We believe natural gas will continue to play an indispensable role, especially in ensuring that commercial and industrial enterprises are able to conduct their operations without interruption,” she said.

Investing in communities
The Big Rivers Electric Corp. service area has been recently buoyed by the Nucor steel plate mill in Brandenburg. The state-of-the-art facility, which rolled its first steel in December 2022, represents a $1.7 billion capital investment with the potential of producing 1.2 million tons annually.

“Big Rivers Electric Corp. is a member-owned, not-for-profit, generation and transmission cooperative headquartered in Owensboro,” said Brittaney Johnson, director of economic development. “We provide wholesale electric power and services to more than 120,000 distribution cooperative members across 22 counties in western Kentucky.”

In May, Big Rivers was praised by Haley McCoy, president and CEO of the Kentucky Association for Economic Development, for their investment in the Kentucky Product Development Initiative. The KPDI program, established in 2022, builds on the commonwealth’s dedicated effort to develop land and buildings in communities statewide to support new, well-paying jobs for Kentuckians and continued economic growth.

Duke Energy, which serves Northern Kentucky’s commercial and industrial corridor, chooses at least one Kentucky site every year and hires national site consultants and local engineering firms to do an analysis, said Amy Spiller, president of Duke Energy Ohio and Kentucky. They outline a strategic development plan, suggested target industries, include site visit feedback and a conceptual building layout for the property, which are presented to community officials.

Duke Energy has evaluated 17 Kentucky sites at a cost of around $20,000 apiece since the program’s inception in 2010, Spiller said.

Approximately seven have been developed. This year’s site is in Walton, Ky.

There has been a “dramatic increase” in growth the past decade, she said, and the utility has increased capacity to meet demand. An active supporter of Kentucky’s PDI program, Duke works closely with state, regional and local partners to help communities submitting PDI applications compile information as it relates to natural gas and electric.

Electric and gas planning engineers for Duke keep growth and reliability top of mind, Spiller said. Each is assigned territories and they are directly tied into the process for economic development requests for information (active inquires), which helps them understand where many companies are interested in locating and developing solutions. They can anticipate where certain areas are growing and plan ahead, especially when communities have masterplans and visions on how to move forward.

Spiller notes that prospective customers regularly ask about sustainability. In response to market demand, Duke has installed roughly 12 MW of solar over the past six years, including a rooftop solar project at the Amazon Air Hub at the Cincinnati/Northern Kentucky International Airport.

Maximizing efficiency
Energy Systems Group is an energy services provider specializing in energy efficiency, sustainability and infrastructure improvement solutions in the government, education, healthcare, commercial and industrial sectors. They also offer a range of sustainable infrastructure solutions, including waste-to-energy, distributed generation and renewable energy. The company employs 400 people throughout the United States.

Recently, Energy Systems Group partnered with Franklin County Fiscal Court to develop and implement a comprehensive $4.8 million project to make the county’s facilities more energy efficient and sustainable while also upgrading aging infrastructure on a self-funded basis to create a healthier, safer and more productive workplace.

Improvements carried out at the county’s jail included an LED lighting retrofit, HVAC improvements, water conservation measures, controls upgrades, building envelope improvements, boiler replacement and on-site backup power generation. Upgrades were also carried out in the county fire stations, clerk’s office and road department. Over the life of the 18-year contract, the project is expected to produce over $6 million in total project savings.

“Energy Systems Group and Franklin County Fiscal Court worked together closely to create strategic solutions, which addressed the county’s goals of reducing operating costs, improving facility air quality, maintenance, operations and upgrading mechanical systems while preserving our capital funds,” said Franklin County Judge-Executive Huston Wells.

Coal-to-Solar moonshot
As a pioneer in coal-to-solar technology, Adam Edelen of Edelen Renewables likens his Martin County Solar Project to a moonshot.

“We’ve committed years to being able to advance this particular focus of bringing green energy opportunities to coal country,” Edelen said.

“And there’s not much competition in this space because it’s a moonshot that’s really, really hard to pull off.”

The project is converting the former Martiki Coal Mine, a brownfield site in Martin County, into a new, clean solar photovoltaic energy facility. Once an active coal mine on the top of a mountain near the Kentucky/West Virginia border, the Martiki site—which closed in the 1990s—has clear access to light from the sun, making it an ideal location for reclamation and the installation of solar photovoltaic panels for electricity generation. Construction on the project is anticipated to begin in mid-2023 and commercial operation is expected in 2024.

“Our primary mission is to bring the promise of renewable energy to the forgotten places of America,” Edelen said. “In Martin County, it’s a capital investment of more than $200 million on a 2,000-acre reclaimed mine site where we’ve worked hard with local elected officials and with economic development and workforce development to create an opportunity for 250 to 300 construction-phase jobs hired, credentialed and trained locally.”

Thanks to a new power purchase agreement with Savion announced in May, Toyota Motor North America has agreed to offtake 100-megawatts of the electricity generated. Renewable energy company Savion is developing the Martin County Solar Project with the support of their Lexington-based partner, Edelen Renewables.