Panel approves bill exempting emergency generators from certain air-emission fees

The Committee on Natural Resources and Energy voted to adopt a committee substitute and give House Bill 346 a favorable recommendation, advancing a measure that carves emergency and backup generators out of statute for air-emission fee calculations and removes a per-source 4,000-ton cap used in determining fees.

Representative Derek Lewis, sponsor of the bill, told the committee the change responds to a contested administrative regulation that had charged some organizations large annual fees for emergency generators attached to larger permitted units. Lewis said the bill excludes emergency generators and exempts backup generators from fees when they operate 100 hours or less for nonemergency uses such as maintenance and testing. The bill also removes the existing 4,000-ton-per-source cap on emission-fee calculations.

“By removing the cap that currently exists, the per-ton fee goes down and it will go down for nearly every single source,” Lewis said, citing the cabinet’s analysis. Lewis and counsel Adam Goble said the cabinet estimated about 712 permitted entities pay emissions fees and that about 708 of those would see no increase and would likely see fee reductions under the change. Lewis and Goble described the measure as a compromise to reduce fees for most permit holders while addressing an anomaly that could charge very large fees when emergency generators were aggregated with permitted sources.

Committee members asked how the change would affect utilities and ratepayers. Representative Bridges asked whether the provision could increase costs for certain utilities and be passed on to customers. Representative Smith described recent instances in which fuel-surcharge changes led to large bill increases for some constituents and urged regular monitoring of impacts. Lewis and Goble said utilities with large, complex permits that have higher administrative costs could be among a small number of sources that see increases, but the cabinet’s analysis predicted most permittees would see a reduction. The sponsors noted the authority’s prior regulatory proposal and a statement of consideration that showed emissions were declining for some utilities, including TVA, which had provided comments earlier in the regulatory process but had not formally opposed the bill.

Representative Blanton asked which utilities could be affected; sponsors named TVA, Big Rivers and East Kentucky Power, and LG&E (Louisville Gas & Electric) as larger entities referenced in committee discussion. Several members said they would support the measure but wanted continued conversations with sponsors and utilities about rate impacts and future monitoring.

The committee recorded a motion and second to adopt the committee substitute and later voted to pass the bill with a favorable recommendation. The chair said the bill should proceed to the House floor for further action.