2026 Regular Session - Day 18 - HB 398 | Rep. Wade Williams

Thank you, Mr. Speaker. I rise today to present House Bill 398. This bill will allow terminal net salvage to be properly accounted for in electric rates. Not because it sounds technical or abstract, but because it directly affects what Kentuckians pay on their power bills both today and in the future. Many in this body, including myself, are concerned with electrical grid stability, affordability, dependability. And a few years ago, we made that statement a priority when we passed Senate Bill 4. That banned the early retirement of fossil fuel power plants without immediate replacement ability. Some would say that in a direct response to the passage of that bill, the PSC made a retaliatory decision that puts Kentucky power bills in jeopardy of sharp increases and thus the need for House Bill 398. And at its core, it's not a complicated idea. Electrical infrastructure, power plants, transmission lines, and substations last for decades. When we build them, we plan them for their entire life cycle. That includes the construction, operation, maintenance, and eventually the retirement. What we're talking about today is simply acknowledging that when a power plant reaches its end of its useful life, it does not disappear for free. There are real and unavoidable costs to safely shut down, remove equipment, and restore to the site as it was. Those costs exist whether we plan for them or not, and the question before us today is not whether these costs will be paid, but when. Terminal net salvage allows utilities responsibly to plan for those end-of-life costs by spreading them out gradually over the years that the asset is providing the electricity. If we prohibit or delay the recovery of these costs, they won't go away. Instead, they show up later as a large, sudden bill when the plant retires. That means sharp spikes for customers that, often the same time, they're already paying for replacement generation. This has already occurred in one part of our state and has had devastating effects. Closing that plant was a PSC decision, and this terminal net salvage issue we're here today is a PSC decision. In plain terms, if not for House Bill 398, future ratepayers would be forced to pay twice. Once for the old plant, coming offline, and again for the new generation. Let me be clear, this is not some radical experimental idea. For decades, Kentucky and many other states have included terminal net salvage in depreciation studies and standard utility practice. What we're doing here today is reaffirming a long-standing, common-sense approach that aligns costs with customers who actually benefit from the asset over time. So including terminal net salvage does not increase the true cost of electricity. It simply prevents us from pretending those costs don't exist. For the sake of rate stability, long-term affordability, and responsible stewardship of Kentucky's energy system, I urge a vote for House Bill 398. Mr. Speaker, I move to pass House Bill 398.