Fletcher, legislature to look at fuel costs;

Heading into an open 2007 legislative session -- the first in five years that won't focus on passing a budget -- lawmakers and Gov. Ernie Fletcher say they plan to tackle ways to keep power costs cheap while encouraging cleaner energy production.

Now is the time for Kentucky to step up its efforts, Fletcher told a group of 130 energy industry officials yesterday at an energy efficiency summit in Lexington.

"I think because of the low cost of energy we haven't focused on efficiency as we should," Fletcher said, emphasizing Kentucky's low electricity rates.

Fletcher said afterward that his administration is in the early stages of crafting legislation that would provide incentives for businesses to conserve more power.

"We also want to provide incentives for clean coal technology" for power plants, he said. "That will do two things. It will help jump-start our energy companies that would have to recoup that investment by raising rates, and allow them to get that new technology to reduce the emissions."

Traditional coal-fired power plants -- even with the latest technologies -- still release greenhouse gases into the air. Kentucky is among the top 10 states for emissions of sulfur dioxide, nitrogen oxide and carbon dioxide, according to the federal Energy Information Administration.

Meanwhile, newer power generation methods are still in the works and are expected to be much more expensive. One such method is integrated gasification, in which the unit produces a synthetic gas to burn in a turbine generator.

Kentucky failed in its bid to land the FutureGen plant, an experimental power generation project that seeks to create no emissions and is partially funded by the federal government.

At the same time, Kentuckians continue to use power at a greater rate than residents in other states, said Rep. Tanya Pullin, a Democrat from South Shore who co-chairs the interim legislative committee on energy. Pullin said she wants to concentrate on ways to encourage individual Kentuckians to conserve energy.

Pullin added she hopes to file a bill that would "allow residential customers to be more active in choosing" energy plans, but declined to offer details yet.

"The lowest electric rates in the country should translate into the lowest electric bills," she said.

She said she expects to work with legislators, including House floor leader, Rep. Rocky Adkins, D-Sandy Hook, on other energy issues. Adkins said this summer that the state needs a full energy cabinet beyond just the governor's office of energy policy to address such issues.

Lawmakers are expected to have more time to devote to energy initiatives this year without a budget to pass.

Overall, Kentucky-based utility plants have a total capacity of 24,500 megawatts, more than the state currently needs, according to the Kentucky Public Service Commission.

But a 2005 study by the commission found Kentucky would need 7,000 more megawatts -- nearly a third of its current capacity -- by 2025 to handle annual increases in demand. That figure doesn't take into account any older plants being shut down over time.

"If we had to build the 7,000 megawatts, there's no guarantee we'll keep the lowest energy rates," said Talina R. Mathews, executive director of the governor's office of energy policy.

Reach Ryan Alessi at (859) 231-1303 or 1-800-950-6397, Ext. 1303, or ralessi@herald-leader.com.