The Kentucky Public Service Commission (PSC) recently issued its Final Staff Report on the 2021 Integrated Resource Plan from Louisville Gas & Electric/Kentucky Utilities Company (LGE/KU). Integrated resource plans, or “IRPs,” are filed and updated every three years by the state’s electric utilities. They are required to include load forecasts and resource plans to meet future demand with an adequate and reliable supply of electricity at the lowest possible cost for their customers.
The Mountain Association formally participated in the review process, along with Kentucky Solar Energy Society, Kentuckians for the Commonwealth, and the Metro Housing Coalition. As Joint Intervenors, we were represented by the Kentucky Resources Council and Earthjustice.
The PSC Staff Report issued after this process reflected many of the concerns shared by the Joint Intervenors and placed the utilities on notice that they need to meet a higher standard with regard to their planning process.
Key points from the PSC Staff Report include:
- LGE/KU produced an incomplete plan that failed to evaluate all reasonable resource options and overlooked many cost-effective strategies.
- Their plan failed to examine continuation or expansion of LGE/KU’s energy efficiency programs, including Demand-Side Management.
- Their plan was disconnected from the reality of LGE/KU’s actual planning. The utilities argued that the Integrated Resource Plan process was only an exercise, but the PSC made clear that the process should result in an actual plan that they intend to implement. This disconnect was illustrated when it was revealed that LGE/KU are preparing to seek permission to build new Natural Gas Combined Cycle Generators, even though their plan described those units as “not viable.”
- A major discrepancy concerned the utilities’ treatment of carbon risk. LGE/KU’s parent company, PPL, has a commitment to reduce carbon emissions 70 percent by 2035 and to be net-zero by 2050, yet LGE/KU’s plan projects the utilities will continue to be heavily dependent on coal and natural gas beyond 2060. The PSC noted that this inconsistency indicates the failure of their plan to address a critical assumption in the utilities’ planning, which could result in their customers being stuck with stranded costs.
- There are many shortcomings in the utilities’ modelling process, which reinforced the comments presented by the Joint Intervenor’s expert witnesses.
Additional concerns that the Joint Intervenors identified in the plan:
- The LGE/KU plan failed to treat distributed energy resources, such as solar net metering, as a resource on par with traditional options. Their plan showed that if net metering were allowed to grow unstifled, customer-owned solar could provide over 500 Megawatts of power by 2030 (compared with less than 30 today). Even though all of this investment would come from the customers themselves, requiring no investment from the utilities, LGE/KU did not evaluate these options as an actual resource to help meet customer’s future needs.
- The LGE/KU plan did not address how it would specifically consider and address the needs of its low-income customers and vulnerable communities.
- Lastly, the plan did not include a Pay As You Save program, which is a way to offer whole-house customer energy efficiency services in which the utility invests in energy efficiency improvements in the customer’s home with the investment being repaid through the customer’s monthly utility bill. The PSC has directed LGE/KU to study offering this program for their customers. Big Sandy RECC, Farmers RECC, Fleming-Mason Energy Cooperative, Grayson RECC, Jackson Energy Cooperative and Licking Valley RECC have offered this program to their customers.
The PSC Staff Report represents a major improvement in how the Commission reviews utility Integrated Resource Plans, raising expectations that future plans should be handled with much greater seriousness and transparency by utilities. Good planning is critical for keeping electricity affordable and reliable.
As Anna Sommer of Energy Futures Group said, “by accepting so many of our modeling recommendations, the PSC has shown LGE/KU how to provide a best-in-class Integrated Resource Plan next time around, making significant improvements relative to how they’ve approached planning in the past. Getting that planning right is the key to finding the lowest cost solutions to keep customers’ electric service reliable, resilient, and affordable.”
Members of the Joint Intervenors are participating in LGE/KU’s ongoing Demand Side Management Advisory Group to help produce comprehensive and effective customer efficiency programs, as well as East Kentucky Power Cooperative’s Integrated Resource Plan process.
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