Significant Merchant Electric Legislative Amendments Head to Governor's Desk

Over the past several years, Kentucky, similar to other states, has received many applications for industrial-scale solar generation and energy storage facilities in rural areas across the Commonwealth. Up to this point in time, seeking and receiving a Certification for Construction from the Kentucky State Board on Electric Generation and Transmission ("Siting Board") followed a framework developed before recent commercial interest in large-scale solar development arose in Kentucky. Numerous issues and concerns of landowner lessors, local governments, citizens-at-large, and developers themselves have arisen during the past several years that were not adequately addressed when the existing Siting Board statute and protocols were enacted.

To address the primary concerns and keep current with evolving industry practices, following two years of study and negotiation, the 2023 Kentucky legislature has amended the applicable Siting Board statutes. Along with clarifying issues of concern to lessors, local governments and the Siting Board itself, and adding new regulatory requirements for developers to meet, the amendments bring Kentucky in line with other states facing the similar concerns. Although the amendments provide a more regulated industry, statutory certainty on these issues will provide developers with a bankable framework for pursuing the projects.

House Bill 4 will amend numerous aspects of the law related to obtaining Certification from the Siting Board under KRS 278.700 et seq. along with related commercial, property rights, notices and enforcement concerns. Major elements of the amendments focus on decommissioning solar facilities, such as surety bond requirements and details for decommissioning and bonding prior to construction. Specific notice requirements are included related to the transfer of ownership of the facilities and the assignment of monitoring and enforcement authority from the Siting Board to the Energy and Environment Cabinet. The assignments include bonding and environmental regulation with an additional fee structure to pay for the Cabinet's new enforcement mandates. The amendments also provide significant emphasis on the jurisdiction and primacy of local governments related to solar facility siting and setback requirements.

The legislation was delivered to the Governor on March 16, 2023, and is anticipated to be signed and become official.

If you have any questions related to the processes and the implications of this significant amendment to applicable law related to siting planning and permitting a merchant electric-generating facility in Kentucky, the attorneys at Stites & Harbison are happy to assist.