Kentucky

Jan 1 - McClatchy-Tribune Regional News - Owen Covington Messenger-Inquirer, Owensboro, Ky.

A broad legislative package designed to make Kentucky a leader in alternative energy production while encouraging energy conservation took three legislative sessions last year to gain the General Assembly's passage.

The enactment of House Bill 1 in August was the second step in a more comprehensive energy package that started with passage of House Bill 299 in 2006.

Several legislators said the 60-day session of the General Assembly that begins in a week likely won't bring the introduction of major policy initiatives on the heels of these two pieces of energy legislation.

"I think first of all that the legislature needs to have the oversight that was stipulated in the bill to make sure that the energy legislation is being implemented properly and being pursued properly," said Rep. Rocky Adkins, a Sandy Hook Democrat and House majority leader.

The thrust of House Bill 1 was in the realm of incentives, with particular emphasis placed on luring a coal gasification plant proposed by St. Louis-based Peabody Energy Co. to Kentucky.

The legislation, the product of a five-day special session in August, provides income and sales tax rebates to energy companies building coal conversion or other alternative energy plants in the state. Coal-based plants will received a portion of coal severance tax revenue generated by Kentucky coal used at the plant.

Rep. Jim Gooch, a Providence Democrat and chairman of the House Natural Resources and Environment Committee, said recently that the new legislation positions Kentucky to be a leader in alternative energy production but will require the willingness of the government and private enterprise to invest.

"We're just kind of right on the bubble right now, and I'm not sure which direction we might go," Gooch said. "It could really take off."

Along with the incentives, the bill includes funding for the study of carbon sequestration and management in coal-based plants, loan forgiveness for engineering and other science students who go into energy-related fields and tax credits for the production of biodiesel and ethanol.

"We want to come back in this next session and enlarge the footprint in the renewable energy areas," said Adkins, who sponsored both House Bill 1 and House Bill 299.

Additions could also include tax credits for homeowners who install energy-saving appliances and improvements similar to those available from the federal government, Adkins said.

Rep. Rick Nelson, a Middlesboro Democrat, has already pre-filed a bill that would make homeowners eligible for tax breaks for installing a solar energy system, upgraded insulation, energy-efficient windows and storm doors and geothermal heat pumps in their homes.

Building on the base established with House Bill 1, Rep. Jim Wayne, a Louisville Democrat, has pre-filed a bill that would reduce the minimum investment for renewable energy facilities to qualify for tax incentives to help with construction costs and a bill to clarify the definition of carbon capture.

Rep. Tommy Thompson, a Philpot Democrat, said part of what needs to be done in the field of energy is on the education side. A skilled work force will be needed for the advancing area of energy production in Kentucky, Thompson said during a recent meeting with the Owensboro City Commission.

"Hopefully, we can keep a lot of Kentucky kids in Kentucky with energy-related jobs," Thompson said. "I think that's going to hold a lot of promise in the future."

About This Series

This is the second of a three-day series from state government reporter Owen Covington examining key issues that will confront the 2008 General Assembly, which convenes Jan. 8. Wednesday's article will look at a proposed pension reform plan.