Mon March 11, 2013
New Law Clarifies Regulation of Biomass, But Doesn't Provide Any Guarantees
A new bill signed into law by Governor Steve Beshear last week clarifies the rules that regulate biomass plants in Kentucky.
The bill gives additional guidance to the Public Service Commission on how to regulate biomass plants that sell power to a utility in Kentucky, with one particular project in mind: a biomass plant outside Hazard. Construction on the plant—owned by Lexington-based ecoPower—is expected to begin on the plant sometime this year.
But the bill is no guarantee that ecoPower will be able to get its power on the grid, or that Kentucky electric utilities will be interested in buying power from the biomass plant.
PSC spokesman Andrew Melnykovych says the bill means biomass will be placed on par with other energy sources in Kentucky…and utilities are required to buy the lowest-cost reliable energy they can.
“The bottom line being that it would still have to meet that reasonability standard, in terms of the underlying cost of power,” he said.
ecoPower CEO Gary Crawford says what the bill does is add a level of certainty to the industry in Kentucky.
“It does give some assurances that plants like this—which are typically not part of a regulated utility’s power generation portfolio, that these plants as independent power producers would have some guarantees as it relates to the revenue stream that’s needed to finance them to begin with,” he said.
Crawford says that over time, his biomass will be competitive with coal and natural gas. While fossil fuels are subject to fluctuations, he says he’ll sell energy to utilities with long-term contracts, and the price of the energy will be stable over that time period.