Home » State energy official says proposed EPA rule would increase electricity rates

State energy official says proposed EPA rule would increase electricity rates

FRANKFORT, Ky. – With U.S. Environmental Protection Agency (EPA) greenhouse gas regulations looming, a state legislative committee yesterday heard that Kentucky electricity rates would likely increase should the proposed rule be approved.

The proposed rule under Section 111(d) of the Clean Air Act, which is expected to be finalized this year, would require existing power plants to reduce carbon dioxide emissions 30 percent below their 2005 levels over the next 15 years, according to news reports. Kentucky Energy and Environment Cabinet Secretary Dr. Len Peters says the impact of the proposed rule would, among other things, increase the state’s traditionally low electricity rates.

Peters told the Interim Joint Committee for Natural Resources and Environment yesterday that his agency’s comments to the EPA on 111(d) last November stressed “we were very concerned about the potential for higher electricity costs, and certainly further weakening of coal markets as a result of the proposed rule.”

In a Nov. 26, 2014 letter addressing the comments, Peters stated that “over half of Kentucky’s electricity consumption is in our electricity–intensive manufacturing sector and any negative disruption to low-cost power could have a tremendous impact to the state’s economy.”

Peters also told the committee that should the rule go through, most states feel a state-based approach to the regulations is better than following a federal plan.

“Even state’s that are opposed to the rule are preparing to submit a plan,” Peters said, calling state plans “a backup” in case the rule goes through. He added many Kentucky stakeholders in the debate over the proposed rule —including utilities – seem to prefer a state emissions reduction plan over federal plan oversight.

The deadline for states to submit their implementation plan is June 2016, Peters said.

If Kentucky chooses not to submit a plan, he said the federal government has set out “very clear procedures” for federal plan implementation. He said his agency suspects a federal plan would not protect Kentucky’s economy, or keep electricity affordable in the Commonwealth.

“At the end of the day, for us in Kentucky, the affordability and reliability of our electricity generation sector should and must remain the priority for us,” Peter said.