Kentucky PSC rejects blanket exemption for landfill gas-fired power projects

The Kentucky Public Service Commission, while it conceded that it often grants exceptions to certificate requirements to small landfill gas-fired power projects, on Jan. 13 rejected an Eastern Kentucky Power Cooperative motion for a blanket certificate exemption for all such future projects.

In August 2015, East Kentucky Power Cooperative (EKPC) filed an application requesting an expedited determination that an expansion of EKPC’s landfill gas-to-energy (LFGTE) generating facility at the Bavarian Landfill in Boone County, Kentucky, is an ordinary extension of an existing system in the usual course of business and that a Certificate of Public Convenience and Necessity (CPCN) would not be required to construct the proposed project. EKPC also requested to be relieved from the requirement to file CPCN applications for future LFGTE projects, so long as the LFGTE facility to be developed is a system resource that benefits EKPC’s members.

In November 2015, the commission issued an order that addressed only the Bavarian LFGTE expansion and found that additional time was required to review EKPC’s request for a blanket declaration regarding whether future LFGTE projects were ordinary extensions in the usual course of business, and thus exempt from the CPCN requirements.

On five prior occasions, the commission has found that relatively small LFGTE projects proposed by EKPC as system resources that benefit EKPC’s members were exempted from the CPCN process. In one example case, the commission approved an LFGTE project in Boone County with an installed capacity of 3.2 MW and a cost of $4.7 million. It also approved two LFGTE projects with a total cost of $5 million, one in Carter County with an installed capacity of 2.4 MW and another in Laurel County with an installed capacity of 4.0 MW.

In this latest case decided in part in November, the commission approved the expansion of the Bavarian LFGTE project in Boone County at a cost of $2.26 million with an installed capacity for the expansion of 1.6 MW, which will bring the total installed capacity for the Bavarian LFGTE facility to 4.8 MW once the expansion is completed.

In each of these prior cases, the commission conducted an in-depth, fact specific examination of the costs and benefits associated with the proposed LFGTE project. And in each case, the commission ultimately found that the cost to construct and operate the facilities would not materially affect EKPC’s financial condition or result in an increase in EKPC’s wholesale power rates; would not conflict with existing certificates or service of other utilities under commission jurisdiction; and, because the facilities were constructed on leased portions of landfills and connected to EKPC’s transmission facilities, the LFGTE facilities did not create wasteful duplication of plant, equipment, property, or facilities.

“The Commission, having reviewed the evidence of record and being sufficiently advised, finds that due to the fact specific nature of each LFGTE project, a binding determination cannot now be made that each future LFGTE project is an ordinary extension of an existing system in the usual course of business and that no CPCN is required under KRS 278.020(1) prior to constructing a LFGTE project.” said the Jan. 13 order.

However, the commission said it recognizes that filing an application for a declaratory order that no CPCN is required can sometimes be a lengthy and resource intense process. Thus, for future LFGTE projects, the commission encouraged EKPC to request a staff legal opinion rather than filing an application for a declaratory order. Commission staff will endeavor to respond to such a request within 30 days. To properly support a request for a staff opinion that an LFGTE project falls within the ordinary course of business exemption, EKPC should provide sufficient written documentation about the proposed LFGTE project to demonstrate facts that include:

  • the LFGTE facility is developed as a system resource for all EKPC members;
  • the fuel source for the LFGTE facility is methane gas collected from a landfill; and
  • the LFGTE facility has an installed capacity of 5 MW or less for new construction or, for an expansion of an existing LFGTE facility, a total installed capacity of 5 MW or less.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.