Put the Public Back in Public Service Utility
Press Conference/Elisa Owen
Post Bullitt County Judgment
A monopoly like the one LG&E/KU has in our service territory is usually gifted only when network efficiencies make it more cost effective for service ratepayers to authorize one company to provide that network than to have a surplus of investments in the same. A company who enjoys a monopoly service territory definitely enjoys that stream of guaranteed payments for the service or good for which it is made by the state the sole provider as privilege -- not a right.
LG&E/KU, for example, our monopoly electric and gas utility, did not earn the trust or the consent of the people who make it possible with their regular payments for energy service. Instead, LG&E/KU received the opportunity to serve us in exchange for attending to our interest in reliable, low-cost electric and gas rates. Despite this rare privilege - to serve with no competitive pressure more than a million Kentucky customers who rightly expect fair, just and reasonable electric rates – we are convinced that LG&E/KU regularly puts its shareholders’ interests above those who actually provide the income stream that ensures it gets a return on its investments in our electric grid. We ask them therefore to set up stakeholder groups of ratepayers with whom to work, and receive their input as binding unless they can convince the PSC otherwise, as they plan their future electric and gas energy investments. The reasons for requesting this direct public input are because LG&E is STILL planning to run and even build NEW fossil fuel generation to cover our state’s energy needs between now and 2060. This even when all signs, economic and environmental, point to the reality that it is more and more likely that very soon renewable electric power generation, and not fossil fuel gas based electric power generation, will be both cheaper and more reliable for ratepayers going forward. As such we’ve 3 questions for LG&E about why they are choosing building out more fossil fuel infrastructure in Bullitt County and elsewhere -- when its higher cost than renewable energy, 75 million and up in the case of the Bernheim pipeline, will be borne by captive ratepayers who are promised in the regulatory compact lowest cost electric rates.
First, a recent study from the Energy Innovation Institute, a non-partisan energy and climate policy think tank, found the incentives in the Inflation Reduction Act passed by the last Congress helped render localized new solar and wind generation less expensive to run than all but one of 210 existing coal plants; and that one was not in LG&E territory. The study’s authors add that the savings of using renewables to replace existing coal plants would be significant: The cost of either new wind or solar is at least 30 percent cheaper than running more than ¾ of existing U.S. coal plants! (See https://energyinnovation.org/wp-content/uploads/2023/01/Coal-Cost-Crossover-3.0-One-Pager.pdf and https://energyinnovation.org/publication/coal-cost-crossover-3-0-local-renewables-plus-storage-create-new-opportunities-for-customer-savings-and-community-reinvestment/)
Why then are LG&E/KU customers suffering further delay in making the switch from coal to less expensive renewable energy?
The IRA created a bonus “energy communities” tax credit for building projects in areas that have historically been centers of fossil fuel extraction and transport. Replacing obsolete coal plants with local renewables could drive up to $589 billion of new investment, and the corresponding number of new jobs necessary to build and maintain that infrastructure in communities traditionally relying on coal extraction to put food on the table.
Why then does LG&E/KU tell us that new fossil gas plants and expanding its gas service into Bullitt County could possibly be in our collective interest when ever higher fossil gas prices can be directly passed through to its customers? As an example, the price of fossil gas that has been passed through to LG&E/KU ratepayers rose 408% from July of 2020 to its most recent high in September 2022. Wouldn’t we captive customers be far better off paying the bills on renewable generation projects for which the operating costs for each additional Kwh of electricity were 0?
Pairing local renewables with storage helps increase grid reliability. The Energy Innovation Institute study evaluated the costs of adding four-hour battery storage with local solar to provide additional reliability, value and in some cases, higher market profitability for renewable generation projects. It found find that the potential savings from switching from coal to local solar can finance 137 GW of four-hour battery capacity across the coal fleet, or more than 60 percent of the capacity of all 210 coal plants it studied. While reliability does not necessarily depend on adding storage, adding some amount of storage can help integrate renewables and accelerate clean energy adoption which is desperately needed to offer people on our planet a more livable future.
Why then does LG&E tell us additional gas generation plants are needed for grid reliability when it was fossil gas generation that failed to perform as expected during the extreme cold snap of December 2022, and mid-west and southern renewables (wind and solar respectively) that kept dangerous rolling black outs then from becoming much much worse?