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The Kentucky General Assembly's enactment of siting legislation for "merchant" power plants is intended to provide for review both of the impacts of the siting of a proposed power plant, and a new mechanism for consideration during the environmental permitting of the proposed facility, of the cumulative impacts of the proposed facility in the context of existing air, land and water pollution.


Below are answers to some basic questions regarding the new law:


What types of new power plants have to get siting board approval?

If the proposed facility is a merchant plant, which is a power plant that sells power on the wholesale market at rates not regulated by the Public Service Commission, then siting review will be conducted by the Siting Board. If the proposed facility is one that is a new unit selling to retail customers whose rates are subject to control by the Public Service Commission will conduct the siting review as part of the review of the unit for issuance of a certificate of convenience and necessity.


Are any proposed merchant power plants exempted from the siting review?


If the proposed power plant, together with any existing units it is associated with, can generate over 10 mW of power and is not a "cogeneration" facility located at a manufacturing site whose steam is being used in the manufacturing process, it is subject to the siting review unless it began physical construction of the structure prior to enactment of the siting law. The Natural Resources Cabinet filmed all of the proposed power plants during the 2002 session and has documentation concerning which facilities had "begun construction."


Does ceremonial dirt-turning constitute physical construction so as to exempt a plant? No. The law defines construction to mean actual on-site placement of materials that will be part of the structure. Site clearing or excavation is not enough to exempt a plant from siting review.


What if an existing merchant plant is modified or replaced? Replacement of a merchant electric generating facility with a "like" facility, or the repair, modification, retrofitting, enhancement, or reconfiguration of a merchant electric generating facility does not constitute construction of a merchant electric generating facility. The question to ask is whether the activity at an existing merchant plant will result in greater impacts on air, land, water or other resources. If so, it should not be eligible for exemption.


Must an application include associated transmission lines? The application should include site assessment information on related transmission lines, since they are "associated facilities" that are reviewed as part of the application for lines associated with a particular plant. However, in the Kentucky Mountain Power case the Siting Board deemed the application complete without the detailed information concerning transmission lines and switching stations.

If not included in the application for siting approval of the generating plant, transmission lines must clearly be approved under a separate but similar siting board application process under Section 8 of the new law. If an applicant files a generating plant application without including or filing at the same time an application for transmission line approval, you should insist that the two issues be addressed simultaneously because a decision on one or the other will have the effect of limiting the consideration of alternative locations.


Who is the Siting Board? The siting Board is composed of the three Public Service Commissioners, the chair of which is the Siting Board chair, and the Secretaries of the Natural Resources and Environmental Protection and the Economic Development Cabinets, and two ad-hoc members chosen from the community by the Governor. One ad-hoc member in the county is the planning commission chair if such a commission exists, or if not, the county judge executive or mayor of the city or county where the plant is to be located. The other is required to be a resident of the county. If the facility is located in more than one county, the county judges of each of the counties affected will elect one to represent them and the Governor chooses the public member. The only qualification for ad hoc members is that they have "direct" financial interest in the proposed facility.


The PSC staff is staff to the Board, which is attached to the PSC for administrative purposes. A majority of the members constitutes a quorum for doing business.


How long is a construction certificate issued by the Siting Board valid? A construction certificate is valid for 2 years after issuance of the last permit required to be obtained, and is conditioned on receiving necessary air, water and waste permits. However, the law provides that the certificate expires if the applicant fails to obtain all permits and has not commenced to construct prior to the expiration date of the certificate, which will not occur since the expiration date is keyed to two years after receiving the last needed permit.


How far must a plant be from neighboring properties? The law establishes setbacks. If there is zoning and planning, the merchant plant must comply with the conditions imposed by the local agency, including setbacks. Otherwise, default setbacks of 1,000 from the property line and 2,000 from residential neighborhoods (a populated area of five or more acres with a density of 1 unit per acre), schools, hospitals or nursing homes. If the applicant in a county with no zoning can demonstrate that it can meet the goals of the Act closer than 2,000 feet, it can receive a waiver of the setback. Calla Energy was the intended beneficiary of a special exemption from the 1,000-foot property line setback, because it is located at a former coal-processing site and is using the on-site waste coal, but must still meet the 2,000-foot setback.


What must be in a siting application? The fist step in the process is the filing of a "Notice of Intent", which must be filed at least 30 days before the application, and which contains a brief description of the proposed facility and its location, and other basic information. During this 30-day period the Siting Board contacts the Governor and local governments and requests appointment of the "ad-hoc" siting board members, and also uses the time to hire its consultant.



No regulation has yet been published listing the contents of an application, but the statute requires that to be complete, an application must have these items:


- the name, address, and telephone number of the person proposing to construct and own the merchant electric generating facility;


- A full description of the proposed site, including a map showing the distance of the proposed site from residential neighborhoods, the nearest residential structures, schools, and public and private parks that are located within a two (2) mile radius of the proposed facility;


- Evidence of public notice that shall include the location of the proposed site and a general description of the project, state that the proposed construction is subject to approval by the board, and provide the telephone number and address of the Public Service Commission. Public notice shall be given within thirty (30) days immediately preceding the application filing to Landowners whose property borders the proposed site; and the general public in a newspaper of general circulation in the county or municipality in which the plant is proposed to be located;


- A statement certifying that the proposed plant will be in compliance with all local ordinances and regulations concerning noise control and with any local planning and zoning ordinances. The setbacks imposed by the local planning and zoning body must be included, suggesting that planning and zoning approval must be obtained prior to filing for siting review.


- a statement that the proposed site is at least one thousand (1,000) feet from the property boundary of any adjoining property owner and two thousand (2,000) feet from any residential neighborhood, school, hospital, or nursing home facility, unless facilities capable of generating ten megawatts (10MW) or more currently exist on the site.


- A complete report of the applicant's public involvement program activities undertaken prior to the filing of the application, including any use of media coverage, direct mailing, fliers, newsletters, public meetings, establishment of a community advisory group, and any other efforts to obtain local involvement in the siting process;


- A summary of the efforts made by the applicant to locate the proposed facility on a site where existing electric generating facilities are located;


- Proof of service of a copy of the application upon the chief executive officer of each county and municipal corporation in which the proposed facility is to be located, and upon the chief officer of each public agency charged with the duty of planning land use in the jurisdiction in which the facility is proposed to be located;


- An analysis of the proposed facility's projected effect on the electricity transmission system in Kentucky;


- An analysis of the proposed facility's economic impact on the affected region and the state;


- A detailed listing of all violations by it, or any person with an ownership interest, of federal or state environmental laws, rules, or administrative regulations, whether judicial or administrative, where violations have resulted in criminal convictions or civil or administrative fines exceeding five thousand dollars ($5,000) and including the status of any pending action, whether judicial or administrative, shall also be submitted; and


- A site assessment report


What must be in a site assessment report?


- A description of the proposed facility that shall include a proposed site development plan that describes:


Surrounding land uses for residential, commercial, agricultural, and recreational purposes;


The legal boundaries of the proposed site;


Proposed access control to the site;


The location of facility buildings, transmission lines, and other structures;


Location and use of access ways, internal roads, and railways;


Existing or proposed utilities to service the facility;


Compliance with applicable setback requirements


Evaluation of the noise levels expected to be produced by the facility;


An evaluation of the compatibility of the facility with scenic surroundings;


The potential changes in property values resulting from the siting, construction, and operation of the proposed facility for property owners adjacent to the facility;


Evaluation of anticipated peak and average noise levels associated with the facility's construction and operation at the property boundary; and


The impact of the facility's operation on road and rail traffic to and within the facility, including anticipated levels of fugitive dust created by the traffic and any anticipated degradation of roads and lands in the vicinity of the facility.


Any mitigating measures proposed to be implemented by the applicant including planting trees, changing outside lighting, erecting noise barriers, and suppressing fugitive dust.


If, as the co-op providers are usually required since they are borrowing federal money to construct plants, the applicant is required to undertake an environmental assessment or environmental impact statement concerning the project, that documentation may be submitted as both a site assessment report and the cumulative environmental assessment but the Cabinet and Siting Board can ask for additional analysis or information.


Who evaluates the site assessment report? The siting board shall have the authority to hire, at the applicant's expense, a consultant to review the site assessment report and provide recommendations concerning the adequacy of the report and proposed mitigation measures. The board may direct the consultant to prepare a separate site assessment report.


As a condition of approval for an application to obtain a construction certificate, the board may require the implementation of any mitigation measures that the board deems appropriate.


What criteria will the Board use to approve or disapprove an application?


Within 90 days after the application is deemed administratively complete (all the pieces are included in the application) or 120 days if there is a hearing, a majority of the Board can approve in whole or part, or deny an application for a merchant power plant based on these criteria:


(a) The impact of the facility on scenic surroundings, property values, the pattern and type of development of adjacent property, and surrounding roads;


(b) Anticipated noise levels expected as a result of construction and operation of the proposed facility;


(c) The economic impact of the facility upon the affected region and the state;


(d) Whether the facility is proposed for a site upon which existing generating facilities, capable of generating ten megawatts (10MW) or more of electricity, are currently located;


(e) Whether the proposed facility will meet all local planning and zoning requirements that existed on the date the application was filed;


(f) Whether the additional load imposed upon the electricity transmission system by use of the merchant electric generating facility will adversely affect the reliability of service for retail customers of electric utilities regulated by the Public Service Commission;


(g) Whether the applicable setbacks will be met;


(h) The efficacy of any proposed measures to mitigate adverse impacts that are identified pursuant to paragraphs (a), (b), (e), or (f) of this subsection from the construction or operation of the proposed facility; and


(i) Whether the applicant has a good environmental compliance history.


The Siting Board is permitted to consider the policy of the General Assembly to encourage the use of coal as a principal fuel for electricity generation, but any facility, regardless of fuel choice, shall comply fully with the Act.


The law does not state how these criteria are to be weighed together in making a decision; only that the decision be based on consideration of these criteria.


As mentioned above, "transcos" (merchant transmission lines not associated with a particular merchant plant) are subject to a parallel siting board review process, and the law provides that a construction certificate decision by the board is based on a determination that the proposed route of the line will minimize significant adverse impact on the scenic assets of Kentucky and that the applicant will construct and maintain the line according to all applicable legal requirements. If the board determines that locating the transmission line will result in significant degradation of scenic factors or if the board determines that the construction and maintenance of the line will be in violation of applicable legal requirements, it may deny the application or condition the application's approval upon relocation of the route of the line, or changes in design or configuration of the line.


Can a company sell or transfer a certificate?


A person that has received a construction certificate for a merchant electric generating facility can't transfer rights and obligation under the certificate without having first applied for and received a board determination that the acquirer has a good environmental compliance history; and the financial, technical, and managerial capacity to meet the obligations imposed by the terms of the approval or has the ability to contract to meet these obligations.


A separate section of the statute also requires PSC approval for transfer of assets worth over $1 million by a regulated utility.


What is the hearing process?


The law provides that the siting board can hold a local public hearing within sixty days of a complete application, where three persons residing in the county or a city, or the planning commission, mayor or fiscal court ask for a hearing. Otherwise the law provides that all proceedings can be held in Frankfort.


The law is less then clear about whether the opportunity for one or two hearings is contemplated. The Siting Board has determined that the law allows two different types of hearings ? a local, informal hearing in which anyone who attends can speak; and a more formal evidentiary hearing whose participation is limited to the applicant, the siting board and any intervenors. According to the Board's emergency regulation, each type of hearing must be requested in writing within thirty days of the filing of the application.


In any evidentiary hearing, strict rules of evidence don't apply. The board is to develop regulations on hearings, and has proposed to do so. Any interested person may ask to be granted "intervenor" status to participate in the evidentiary hearing and may appeal a decision.


What siting review applies to new regulated utility units?


While new power plants proposed by utilities that will sell power to retail customers at rates regulated by the Public Service Commission do not require siting board approval, the Public Service Commission will conduct a similar review of the siting as part of their review process and will issue or deny a "site compatibility certificate. An application for a site compatibility certificate must include a site assessment report and meet setbacks unless the new unit is locating at an existing regulated site. The PSC may deny an application or require reasonable mitigation of impacts disclosed in the site assessment report including planting trees, changing outside lighting, erecting noise barriers, and suppressing fugitive dust, but the commission cannot order relocation of the facility. Regulated utility units retain their existing exemption from planning and zoning.


What requirements does the law contain to protect retail customers from service problems or increased service costs related to these merchant plants using the transmission lines?


In order to address concerns that interconnections of new power plants with the transmission lines that make up the transmission system in Kentucky, (called the "grid") is managed and that the existing utility customers do not pay for any upgrade necessary to manage the new load from the merchant plant, PSC approval of any interconnection with a merchant plant over 10 mW of capacity is required and passing any costs to regulated utility customers is prohibited.


Also, provisions are made to protect retail customers from curtailments of service in emergency cases by requiring that other customers are curtailed first (including merchant plants).


What about environmental impacts?


The law does not change the permitting role of the Natural Resources and Environmental Protection Cabinet, but does add a new consideration to the permitting. A person concerned with a proposed power plant should continue to track applications for air, water and waste permits and be involved in those permit review processes, each of which (with the exception of most water withdrawal permits) have public notice and comment periods, since those permit review processes are not linked to or dependent on the siting process.


The law creates a process for evaluation by the Natural Resources and Environmental Protection Cabinet of the cumulative environmental impacts of proposed merchant and regulated power plants. The requirement applies to any person proposing to construct a facility to be used for the generation of electricity. Unless the construction was commenced before April 15, 2002, or the facility already has a certificate of convenience and necessity from the PSC prior to that date, no one can begin construction unless they submit a "cumulative environmental assessment" to the Natural Resources and Environmental Protection Cabinet.


Where an applicant has developed documentation under the National Environmental Policy Act (NEPA) that can be submitted; otherwise the applicant's assessment must describe with appropriate analytical support:

the types and quantities of air pollutants that will be emitted, water pollutants that will be discharged, and wastes that will be generated by the facility and a description of the methods to be used to control those emissions and discharges,

and the methods to be used to manage and dispose of such wastes. For water withdrawals, the applicant must identify the source and volume of anticipated water withdrawal needed to support facility construction and operations; and describe the methods to be used for managing water usage and withdrawal.


The law empowers the cabinet to impose conditions regarding the timing, volume, duration, or type of pollutants on a permit, registration, general permit, or permit-by-rule for a facility subject to this section as are deemed necessary to comply with applicable standards.


How can I find out more about the siting board and the new siting law?


The Kentucky State Board on Electric Generation and Transmission Siting, which is the formal name of the siting board, has a website at


that contains a copy of the siting law, all proposed and current regulations, and has a "Guide to Public Participation: Kentucky's Electric Generation and Transmission Siting Process."


The Siting Board adopted an emergency regulation, which can also be found on the website, 807 KAR 5:110E, that outlines in detail the requirements of the Notice of Intent, and the procedures and addresses for requesting formal and informal hearings and for becoming an intervenor in any formal evidentiary hearing on an application.


The website also contains copies of all notices of intent and applications filed to date.





By Kentucky Resources Council on 07/05/2002 5:32 PM
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