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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Revised House Bill 5 Broadens Incentives for Renewable Energy Providers  Posted: February 16, 2007
Testimony of Tom FitzGerald, Director
Kentucky Resources Council, Inc.
Before the House Appropriations and Revenue Committee
Concerning House Bill 5
February 13, 2007

Mr. Chairman, members of the Committee. I appreciate Representative Adkins’ leadership this session and last on energy policy and independence issues, and in particular his recognition of the importance of energy efficiency and of creating incentives for investment in the development and deployment of renewable energy.

With modest incentives during the past 20 years, the unit cost of wind, solar, biomass, geothermal and hydro power has dropped substantially and in many markets is at or below the costs of more traditional forms of power. With fourteen utilities and four municipalities in our Commonwealth offering “green” power to their ratepayers, there is a real opportunity here for Kentucky to develop the capacity that these utilities will need to meet consumer demand – not only from new projects by the utilities themselves, but also by entrepreneurs supplying renewable energy. The opportunity to secure the incentives for expanded deployment of renewables provided in the committee substitute is an investment on behalf of our environment and on behalf of Kentucky’s ratepayers. Smaller, distributed generation of renewables offer an important opportunity for Kentucky’s utilities to defer new substantial capital investments in base load and peaking plants by utilizing available smaller renewable capacity to address peak demands, thus postponing the need for new capital investment while the nation determines the approach to addressing carbon dioxide (CO2).

The landscape of energy policy is very much in flux, as you are aware. There are significant uncertainties in what form the inevitable carbon mandate will take, and in looking at any energy path, the ability to capture and sequester carbon dioxide and to minimize other pollutants over the life cycle of a fuel will drive out energy choices. One of those approaches is coal gasification, which is sought to be advanced by some of the incentives in this bill.

While KRC has concerns about the historic approaches and environmental impacts of coal-to-liquid processes, we understand, appreciate, and share Rep. Adkins belief that attracting to Kentucky more of the research and development (R&D) that is ongoing in this area will require that the state lower the risk to investors by providing some financial incentives.

We look forward to continued dialogue on these issues and to assuring that the full life cycle costs of all of our energy choices are analyzed and accounted for in our policy and investment decisions. Mr. Chairman, members of the Committee, I encourage your support for House Committee Substitute 2.



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