GOP scrambles to protect utilities from strict interpretation of pro-coal law
The Republican-led legislature in Frankfort is rushing to modify pro-coal-fired power plant legislation it passed in 2023 to ensure state regulators allow companies to charge customers decommission costs over the life of a plant, not all at once.
Legislation that cleared the House Natural Resources and Energy Committee Thursday would instruct Kentucky’s Public Service Commission not to misconstrue a 2023 law setting tougher standards for retiring coal-fired units.
Witnesses told the House panel the PSC has “reintepreted” 2023’s SB 4 to mean utilities cannot spread out costs, forcing customers to bear the cost of building new sources of generation at the same time they pay off retiring old ones.
“We’re going to push off some of those costs until the asset’s retired, which is unfair to the consumers of the utility at that time, because ... they’re paying for the new unit, which is the replacement asset, but they’re also paying for the retirement of the asset that’s no longer in service,” said David Samford, general counsel for East Kentucky Power Cooperative in Winchester.
SB 4, which passed without the governor’s signature in March 2023, established stricter regulations on retiring fossil fuel-fired power plants by putting the decision to do so in the hands of the PSC.
The commission, which regulates Kentucky’s utility providers, has to weigh the effect decommissioning a plant would have on the wider electricity grid and ensure that its retirement doesn’t negatively impact consumer rates.
That cost-analysis language has backfired on Republican lawmakers who wanted to make sure Kentucky doesn’t abandon base load coal- and natural gas-fired energy. In several cases since 2023, the PSC has denied utilities’ requests to recover depreciation costs because they failed to rebut the “presumption against the retirement of a fossil fuel-fired electric generating unit,” as strictly required under the law.
“The Commission is bound by the plain language of the statute,” the PSC told Duke Energy in an Oct. 2 order denying proposed rate adjustments.
Literal and strict approach to SB 4 language
Utilities routinely adjust the exact future date they expect to retire a power plant when they go before the commission for a standard rate adjustment. In the case of Duke Energy and others, the PSC abruptly halted those standard operating procedures to strictly follow the Republican-backed pro-fossil fuels law.
“While there are valid reasons for allowing utilities to recover such costs in certain circumstances,” the PSC told Duke Energy in its case late last year, the law clearly states that when decommissioning a fossil fuel-powered plant is involved, the name of the game has changed.
Filings reviewed by the Herald-Leader in cases by Duke Energy and East Kentucky Power show the PSC and attorney general’s office taking a literal, strict approach to SB 4 language. It forced the companies to abandon their initial approach at recovering costs to avoid getting bogged down in a drawn-out process of reviewing plant closures that may not become immediately relevant sometimes decades into the future.
A spokesperson for the PSC declined to comment on the legislation Thursday.
Support for and opposition to HB 398
HB 398, which the Natural Resources and Energy Committee overwhelmingly voted to advance to the House floor Thursday, would add a new section to SB 4 that reauthorizes the PSC to approve a utility’s decommission, removal and salvage costs and depreciation expenses over the unit’s lifetime “prior to retirement authorization.”
The Kentucky Resources Council, a Frankfort -based nonprofit that advocates for public health, environmental justice and sustainability, opposes HB 398 because it says it prioritizes the financial certainty of the utility over ratepayer protections.
“By allowing utilities to seek approval to recover decommissioning, removal, salvage, and depreciation costs before a generating unit is authorized for retirement, the language shifts financial risk from shareholders to customers regardless of whether retirement ultimately occurs or proves cost-effective,” the group said in a statement opposing the bill.
KRC and several other Kentucky environmental advocacy groups touted new research last month they said proved the Kentucky General Assembly is costing Kentuckians billions by putting a thumb on the scale in favor of coal and natural gas.
Senate Republicans were quick to shoot back, criticizing the groups for relying on flawed, biased research by a research organization already committed to eliminating coal.
Kentucky’s energy infrastructure
That organization, Current Energy Group, has since told the Herald-Leader its conclusions were not predetermined and that the analysis “did not assume a particular policy outcome or require the elimination of specific energy sources.”
Their conclusions were simple: Kentuckians could save upward of $2.6 billion over the next 25 years by setting fuel-neutral public policy.
But Republicans on the committee Thursday showed no signs of letting up on their position that coal and natural gas are crucial to ensuring Kentucky has enough base-load energy to meet its demands.
HB 398’s sponsor, Rep. Wade Williams, R-Earlington, said the cold snap over most of Kentucky right now proves how vital the commonwealth’s existing energy infrastructure is to keeping the lights on.
The panel’s chair, Rep. Jim Gooch, said the state’s utilities have erred by replacing coal and natural gas with “sources that aren’t as efficient.”
“What we’ve done over the past is we have actually decommissioned or taken offline a lot of gigawatts of thermal generation base-load power,” he said. “ It’s something we have to watch to make sure that that does not happen to the citizens of Kentucky. This bill goes a long way toward that.”
This story was originally published January 29, 2026 at 2:03 PM.
