House approves bill allowing utilities to recover decommissioning costs in rates

The Kentucky House on Jan. 30 passed House Bill 398, a measure that allows utilities to include terminal net salvage costs — the anticipated cost of retiring power plants — in rates spread over the life of the asset. The sponsor was recorded as Representative Williams and the floor explanation was given by the gentleman from Hopkins.

Supporters said the provision smooths costs and avoids sudden bill spikes when a plant is retired. "If not for House Bill 3 98, future ratepayers would be forced to pay twice," the gentleman from Hopkins said on the floor, arguing the change is aligned with long-standing utility accounting practices.

Members pressed for details on transparency and safeguards. The gentleman from Fayette 45 asked whether retirement funds collected over time would be kept separate from general utility revenues and whether customers and the Public Service Commission (PSC) would have visibility into those funds. The gentleman from Hopkins replied that the rate study and PSC approval process — which the floor record describes as a multi-thousand-page rate study — delineate those terms and that the PSC must approve rate recovery terms in a rate-making case.

Floor roll call recorded 78 yeas and 15 nays; the clerk announced the bill as passed. The record shows questions and concern about the PSC’s role in oversight and about what happens if a unit is not ultimately decommissioned after recovery has begun; the explainer said terms would be spelled out in the PSC decision for the rate case. The bill was presented as a response to prior PSC decisions and to concerns about rate stability going forward.