Recent years have seen an increased interest in siting merchant utility-scale solar facilities in Kentucky. HB 4 changes existing law on how the Kentucky State Board on Electric Generation and Transmission Siting (the Siting Board) reviews these proposed power plants, and weakens some protections now being imposed by the Siting Board to assure decommissioning plans and bonds to assure that the facilities are removed when no longer in use.
KRC does not support House Bill 4 because it does not protect landowners or hold merchant power plants fully accountable for removing their facilities when they're no longer in use. Bonds must cover all costs, and landowners must control what if anything is left behind. Local government authority to require more, but not less, must be protected. HB 4 needs revisions to achieve these goals, since it weakens landowner protections.
HB 4 Key Problems and Solutions
What are the problems and what are reasonable solutions to respect landowners and local government authority regarding merchant power plants?
- Landowner - Lessor No Longer Controls What’s Left Behind
Under current law, the state Siting Board is requiring the conduit, wires, concrete and other equipment associated with the merchant solar facilities to be removed when the facility ends its useful life. Where a landowner wants equipment or material removed, or some of it left behind, that request is respected.
Under HB 4, the LLC that owns the solar facility will control that decision. Unless a county with planning and zoning adopts decommissioning requirements that include removal of everything unless the landowner asks otherwise, HB 4 allows the applicant to leave any "interconnection or other facilities in place for future use” and to leave behind anything buried below 3 feet. And the bill requires that this restriction be included in any leases, so the landowner cannot require that everything be removed. It is entirely the company’s decision.
How to fix this?
Simply provide that all equipment and facilities be removed at the end of the useful life of the facility unless the landowner/lessor requests otherwise. The landowner should control what if anything is left behind.
- Bonds will be Inadequate To Pay Costs For Decommissioning
Under current law, the Siting Board is requiring a bond to cover the anticipated cost of decommissioning and restoration of the property. Under HB 4 the bond is initially set by a nongovernmental person with no recourse for the landowner to challenge whether the bond is set too low to fully protect them.
And then the bill devalues the bond by reducing it to Net Present Value so that it will be inadequate in most cases, particularly where there is no local zoning or planning. Bonds have a face value, and while the costs of decommissioning and the value of the material for scrap purposes will change over time, bond amounts are not reduced to net present value (NPV).
How to fix this?
Simply provide that the bond shall be set in an amount to assure that the net costs of decommissioning, which are the projected costs less the projected scrap value. Periodic reviews, which are provided for in HB 4, will assure that the bond is adjusted.
- Transfers Of Rights and Responsibilities Should Need Approval Throughout The Facility’s Useful Life
Under current law, transfers of rights and responsibilities for facilities that receive construction certificates are required to be approved, to assure both that the transferee has a good environmental compliance background and has the wherewithal to comply going forward. Under HB 4 once the plant is up and running, no approval from either the Siting Board or Cabinet would be required.
How to fix this?
Simply leave in place existing language that requires such approval, and clarify that any transfer of rights and responsibilities over the life of the facility needs governmental approval. Clarify that changes in control of the LLC as well as control of the particular project need approval.
- Language Affecting Siting Board Orders And Conditions Should Be Removed
Under current law, the Siting Board has issued a number of construction certificates to applicants for merchant solar power facilities. Some of those Orders have been challenged and those cases are pending.
Under HB 4, language in Section 5(6) and (7) attempts to affect the outcome of pending litigation over past Siting Board approvals and conditions imposed by those Orders. This language weakens protections and obligations imposed by past Siting Boards who included representatives of local government and citizens in the crafting of those Orders.
How to fix this?
Simply eliminate the language in Section 5(6) and (7) that is addressed to current Board Orders and conditions.
- Local Governmental “Primacy” And Power Not Clear Enough
Under current law, where a local planning and zoning commission that has established setbacks, those setbacks must be respected in any Siting Board decision and cannot be waived. Additionally, any requirements imposed by local planning commissions in granting local zoning or conditional use permits and any additional requirements imposed by counties under home rule powers under KRS 67.083 are explicitly protected in existing law although not directly enforced by the Siting Board.
Under HB 4 there is conflicting language that appears to give counties with planning and zoning the power to require more than what is listed in the statute for decommissioning plans, such as requiring that all facilities be removed unless requested by a landowner, but other language could be read to limit that power. Additionally, there is new “primacy” language that is incredibly overbroad in Section 6 that would allow any local ordinance, permit, or license to completely override the certificate process and to eliminate bonding.
How to fix this?
Clarify that counties with and those without planning and zoning can establish setbacks more protective or different than in the state law, and can require more than is provided in the statute regarding decommissioning plans and bonds, but not less. Counties and cities need the flexibility to respond to local situations, such as using prior mine sites and brownfields for new projects, but baseline protections for landowners should never be waived without the landowners’ consent.
- All equipment should be removed at the end of the solar facility's life unless the landowner requests otherwise.
- The bonds should be set by the Siting Board or County with advice of an engineer at an amount sufficient to completely remove the facility and restore the property, minus salvage value, and should be reviewed every 5 years.
- Transfers of ownership or control of the LLCs that own these power plants should be reviewed and approved by the Board.
- The bill should be prospective only and not try to affect existing Siting Board decisions and court cases.
- Local governments should be able to require more, but not less, protections for landowners and communities than the Siting Board.