This past week, the Kentucky Energy and Environment Cabinet released the 12th edition of “Kentucky Coal Facts,” an annual publication that spells out anything a Kentuckian might want to know about the commonwealth’s most prized natural resource.
According to the report, the industry contributed approximately $4 billion to the commonwealth’s economy in 2011. Kentucky was the third largest producer of coal in the nation with over 100,000 tons of coal mined, or 10% of the nation’s total. Approximately one-quarter of the coal mined in Kentucky remained in the commonwealth – that’s one-quarter of Kentucky’s total coal production that would be exempt from the ever-encroaching fist of the Environmental Protection Agency should the Bluegrass Institute-sponsored Intrastate Coal and Use Act become the law of the land.
Also noteworthy is that while the nation as a whole generates 42% of its electricity needs from coal, in Kentucky we continue to generate a whopping 93% of our electricity from coal. Because of our reliance on coal, Kentucky has enjoyed some of the lowest energy rates in the nation, and at 7.1 cents per kilowatt-hour we had the fourth lowest average electricity costs in 2011. This is good not only for our residents, but also for the possibility of attracting further business to the commonwealth.
However, after 20 years of falling energy rates in inflation-adjusted terms, over the past ten years electricity rates have been rising – a predicament aggravated by the EPA’s unprecedented new regulations in recent years. As the report notes:
[I]n the near-term the price of electricity in Kentucky will be most affected by fuel prices and environmental regulations. Whether coal use continues at historical levels or more natural gas is integrated, the price of electricity will fluctuate most quickly dependent on the price of fuel commodities consumed by electric utilities. The way in which electric utilities choose to comply with new environmental regulations will also shape future rates and ultimate consumer costs.