State and Local Policy Database

Kentucky

State Scorecard Rank

30

Kentucky

14.5Scored out of 50Updated 9/2016
State Government
Score: 5 out of 7
State Government Summary List All

Kentucky offers a variety of financial incentives for energy efficiency investments, as well as Property Assessed Clean Energy (PACE) financing. The state government leads by example by setting energy requirements for public buildings, benchmarking energy use, and encouraging the use of energy savings performance contracts. Energy efficiency research is conducted at the University of Louisville's Conn Center for Renewable Energy Research.

Financial Incentives List All

Financial Incentive information for Kentucky is provided by the Database of State Incentives for Renewables and Efficiency (DSIRE Kentucky) and State Energy Office contacts. Information about additional incentives not present on DSIRE is listed here. In addition to the state-funded incentives on DSIRE and below, Kentucky has enabled Property Assessed Clean Energy (PACE) financing and has one active program. For additional information on PACE, visit PACENation.

School Energy Managers ProjectThe School Energy Managers Project (SEMP) provides support for energy managers at the school district level. Matching funds are available to employ trained energy specialists or energy efficiency projects in school districts. The goal of the two year program is to reduce energy usage by five percent in participating districts from a 2012 baseline.

Industrial Revenue Bonds: State and local government-issued bonds to finance industrial buildings, as defined by KRS 103.200. This financing can cover the cost of energy efficiency projects.   

Local Government Efficiency Retrofit Program (LGERP): This program is administered by the Department for Local Government and provides no-low cost loans and small matching grants to city and county governments in order to incentivize energy savings performance contracts.  

Last Updated: July 2017

Building Energy Disclosure List All

There is no disclosure policy in place.

Last Updated: July 2017

Public Building Requirements List All

House Bill 2, signed by Governor Beshear in 2008 requires that all construction or renovation of public buildings for which 50% or more of the total capital cost is paid by the state must be renovated or designed to meet high-performance building standards. All building leases entered into by the Commonwealth or any of its agencies on and after July 1, 2018 shall also meet the new standards.

House Bill 299 (2006) requires a life-cycle cost comparison of at least two types of energy-efficient HVAC equipment, including geothermal equipment when feasible, for every bid for new construction or for existing facility upgrade.

The High Performance Buildings Advisory Committee assisted the Finance and Administration Cabinet in establishing the regulations that set out the standards and benchmarks by which to evaluate buildings. Leadership in Energy and Environmental Design (LEED) certification is required for new buildings. The level of LEED certification depends on the project budge, and, in general, the higher the budget and bigger project, the higher level LEED certification required. The regulations also provide for exemptions from the requirements if compliance is shown to cause the agency an "extraordinary undue burden."

The Kentucky Finance and Administration Cabinet received $3.65 million over a two-year period to develop and pilot a software program to benchmark, track, control and diagnose energy use in state government buildings. The software, CEMCS or Commonwealth Energy Management and Control System, won a 2012 national innovation award from the National Association of State Facilities Administrators. This facility presently accounts for 324 (and increase of 95% over last year) buildings and 10.8 million square feet and 23,663 occupants of state buildings, and is budgeted to add more buildings in the current biennium.  Because of the positive budgetary impacts, it was one of few programs in state government granted a budget increase in the current biennium so that more buildings could be added to CEMCS. Current state policy is to publicly disclose building performance for all buildings in the CEMCS as they are added to the system, and as the budget allows over time.

Currently, 0% of buildings are benchmarked in Portfolio Manager.  However, 14% of facilities are tracked, benchmarked, and managed/controlled through the state Commonwealth Energy Management and Control System (CEMCS), with more added each year.

Last Updated: July 2017

Fleets List All

No mandatory policy in place or proposed. The Kentucky Division of Fleet Management is a member of the Green Fleets of the Bluegrass. Green Fleets of the Bluegrass aims to improve the environmental performance of vehicle fleets across Kentucky by reducing petroleum fuel use. Green Fleets of the Bluegrass is a voluntary recognition program of the Kentucky Clean Fuels Coalition (KCFC).

Note: For state efficient fleet initiatives, policies listed must make a specific, mandatory requirement for increasing state fleet efficiency. State alternative-fuel vehicle procurement requirements that give a voluntary option to count efficient vehicles are thus not included.

Last Updated: July 2017

Energy Savings Performance Contracting List All

Kentucky statutes incentivize agencies to review the possibility of using an ESPC and implement one if appropriate. ESPC projects are regularly implemented by the state government, with ESPC projects totaling over $250 million. The Department for Facilities and Support Services (Division of Engineering and Contract Administration) provides online information about state ESPC processes.

In recent years the state has increased its use of ESPCs. The state-funded Green Bank of Kentucky, originally capitalized with $14 million to provide low-interest loans to state agencies, has all been loaned and principle and interest payments have begun to provide loans for a second generation of ESPCs, with nearly $2.4 million currently in the bank available for more loans. All state-owned buildings above 20,000 sq. ft. have been evaluated and all those that were found to be viable candidates have now been included in an ESPC project. All seven state-supported universities have had ESPCs on their campuses. In addition, all 16 colleges (with more than 70 campuses) of the Kentucky Community and Technical College System have implemented ESPCs.

Kentucky has seen over $1 Billion in ESPC (state, local, and university) since enabling legislation in 1996.

Last Updated: July 2017

Research & Development List All

The Conn Center for Renewable Energy Research (CCRER) at the University of Louisville provides research in renewable energy and encourages the development of technologies and practices that increase energy efficiency.  The Center's ongoing goal is to seek outcomes that enhance global energy and economic security and maintain US technological leadership in developing and deploying advanced energy technologies. The Conn Center leads research that increases homegrown energy sources to meet the national need while reducing energy consumption and dependence on foreign oil.  The Center has steadily been increasing its annual research expenditures from $900 thousand in 2007 to $2.1 million in 2011 with the expected goal of reaching $5 million by 2016.

Last Updated: July 2017

Buildings
Score: 5 out of 7
Buildings Summary List All

Residential construction must comply with the 2009 IECC with state amendments, while commercial construction must comply with the 2012 IECC. The state completed a gap analysis and strategic compliance plan in 2011. The state is also undergoing a code improvement/compliance study in partnership with the U.S. Department of Energy and Pacific Northwest National Labs.

Residential Codes List All

As of October 1, 2014, the 2013 Kentucky Residential Code (KRC) mandates residential buildings must comply with the 2009 IECC or IRC with state amendments.

Last Updated: August 2017

Commercial Code List All

As of October 1, 2014, projects constructed under the 2013 Kentucky Building Code (KBC) must comply with the 2012 IECC and ASHRAE 90.1-2010.

Last Updated: August 2017

Compliance List All
  • Gap Analysis/Strategic Compliance Plan: Kentucky partnered with the Building Codes Assistance Project to complete a gap analysis and strategic compliance plan in 2011.
  • Baseline & Updated Compliance Studies: Beginning in late 2014, the Kentucky Departments for Housing, Buildings and Construction and Department for Energy Development and Independence are partnering with the Midwest Energy Efficiency Alliance, the US Department for Energy, and the Pacific Northwest National Laboratory in the administration of a three-year, $900,000 three-phase initiative to (1) measure the baseline energy codes compliance rate across the Commonwealth following the latest US DOE/PNNL protocol, (2) implement a range of code improvement activities, and (3) measure the post- energy code compliance rate to determine if there was improvement. Findings from Phase I were reported in November 2015. Phase 2 is ongoing through September 2016. Phase 3 will run from March 2017 through September 2017.
  • Utility Involvement: NA
  • Stakeholder Advisory Group: The current codes compliance study and improvement initiative fostered the development of a Codes Collaborative that meets three times per year.
  • Training/Outreach: Phase 2 of the code improvement/compliance study (just completed Apr 2017) resulted in a series of statewide workshops, a circuit ride (CR still active), and an online short-video library of codes training (still available).

Last Updated: July 2017

CHP
Score: 0.5 out of 4
CHP Summary List All

No policies are in place that encourage the deployment of CHP systems. No new CHP systems were installed in 2016.

Interconnection StandardsList All

Policy: Kentucky Interconnection Standard

Description: Applicable only to systems powered by biomass or biogas, Kentucky’s interconnection standard also only is available to systems 30kW or below.

Last Updated: August 2017

Encouraging CHP as a ResourceList All

There are currently no state policies designed to acquire energy savings from CHP (like other efficiency resources) or energy generation from CHP (in terms of kWh production) that apply to all forms of CHP.

Last Updated: August 2017

Deployment IncentivesList All

Net Metering: Kentucky offers net metering to the same types of systems as it does interconnection. CHP systems would have to be powered by biomass or biogas, and must be no larger than 30kW.

Last Updated: August 2017

Additional Supportive PoliciesList All

Kentucky has implemented a focused technical assistance effort to encourage CHP deployment in the state. As part of an ongoing multi-year stakeholder process (2014 - 2016), a variety of education and outreach activities are being conducted in partnership with the Kentucky Association of Manufacturers (KAM), Kentucky Pollution Prevention Center (KPPC), and the Southeast CHP Technical Assistance Partnership (TAP). In addition, feasibility studies are conducted to help assess the potential for CHP in public buildings and at other sites in Kentucky.

Last Updated: August 2017

Utilities
Score: 3 out of 20
Utilities Summary List All

Kentucky has taken an increased interest in utility-sector energy efficiency over the past several years, although statewide investments in and savings from utility energy efficiency programs are still below the national average. Kentucky's 2007 Energy Act recommended that utilities examine specific issues regarding energy efficiency and related programs, and in 2008, Kentucky released its first statewide energy plan, proposing to use efficiency measures to offset at least 18% of the state’s projected energy demand in 2025.  Since then, both investor-owned and publicly-owned utilities have expanded their energy efficiency programs. For years, these programs were optional, but legislation in 2010 – HB 240, which reenacts a bill that passed in 2008 – allows the KPSC to create requirements for demand-side management programs.

At least one investor-owned utility, Duke Energy, has offered demand-side management (DSM) programs in Kentucky since 1996. Kentucky's regulated utilities administer and implement DSM programs with oversight from the Kentucky Public Service Commission (PSC), and rural electric cooperatives also offer some energy efficiency programs. Natural gas programs are not required by legislation, but are available for all sectors other than industrial customers. These programs are administered by utilities and implemented by third-party contractors.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Last updated: August 2015

Customer Energy Efficiency Programs List All

Kentucky's regulated utilities administer and implement DSM programs with oversight from the Kentucky Public Service Commission. Several utilities administer some programs, although overall funding for and activity in energy efficiency programs have been relatively modest. Program costs are recovered through tariff riders on utility customer bills.

For years, these programs were optional, but a new interest in efficiency began in 2007 with Kentucky's 2007 Energy Act, which recommended that utilities examine specific issues regarding energy efficiency and related programs. The state has since established new rules to allow the Commission to require utilities to implement specific DSM programs. State legislation HB 240 was reenacted in 2010 (after first passing in 1994 and amended in 2008) to allow the KPSC to create requirements for demand-side management programs. The Commission's authority is only to review and approve or deny DSM programs and associated cost recovery through surcharges on customer bills. Kentucky requires that utility programs allocate their costs and resources according to the sectors that the programs will benefit (residential, industrial, etc.). The legislation also requires that the KPSC consider equity between different classes of customers. Utilities are not required to report annually on energy efficiency programs to the Commission.

Natural gas programs are not required by legislation, but are available for all sectors other than industrial customers. These programs are administered by utilities and implemented by third-party contractors.

The most recent budgets for energy efficiency programs and electricity and natural gas savings can be found in the State Spending and Savings Tables.

Last Updated: June 2016

Energy Efficiency as a Resource List All

Regulated utilities are required every three years to prepare and file integrated resource plans (IRPs) that consider how to use demand-side resources to meet forecasted requirements reliably and at the lowest possible cost.

Last Updated: June 2016

Energy Efficiency Resource Standards List All

There is currently no EERS in place.

For more information on Energy Efficiency Resource Standards, click here.

Last Updated: June 2016

Utility Business Model List All

Kentucky is generally supportive of lost revenue recovery. The state reiterated this in 2010 in House Bill 240, which reenacted preexisting legislation from 2008. Lost revenue recovery is determined on a case-by-case basis, but the largest investor-owned electric utilities in Kentucky have DSM proposals in place that include similar lost revenue recovery methods. For these utilities, lost revenues are calculated using the marginal rate, minus variable costs and multiplied by the estimated kWh savings from a DSM measure (KY Statute Ch. 278, Title 285; Dockets 2007-00477; 2008-00473).

Natural gas utilities use a similar system to the one described above.

Statute 278.285 allows utilities to recover the full costs of DSM programs via rates and allows incentives designed to provide financial rewards for utilities and encourage implementation of cost-effective DSM programs. Duke Energy, Kentucky Power (AEP), and Louisville Gas & Electric (LG&E) each have a shared savings mechanism in place. Duke and AEP can earn an incentive of up to 10% of net savings after program costs while LG&E can earn up to 15% of net resource savings.

Last Updated: June 2016

Evaluation, Measurement, & Verification List All
  • Cost-effectiveness test(s) used: TRC, UCT, PCT, RIM
  • Uses a deemed savings database: no

The evaluation of ratepayer-funded energy efficiency programs in Kentucky relies on regulatory orders (807 KAR 5:058). Evaluations are administered by the utilities, but there are no specific legal requirements for these evaluations in Kentucky. Kentucky uses four of the five classic benefit-cost tests identified in the California Standard Practice Manual. These are the Total Resource Cost (TRC), Utility/Programs Administrator (UCT), Participant (PCT), and Ratepayer Impact Measure (RIM). The rules for benefit-cost tests are stated in Case No. 1997-083. Kentucky specifies the TRC to be its primary cost-effectiveness test. These benefit-cost tests are required for total program level screening, with exceptions for low-income programs, pilots, and new technologies.

Last Updated: June 2016

Guidelines for Low-Income Energy Efficiency Programs List All

Requirements for State and Utility Support of Low-Income Energy Efficiency Programs

In 1994, Kentucky passed its DSM Statute (KRS 278.285), which allows utilities to propose and the PSC to review DSM programs aimed at reducing their customers’ energy use through efficiency and load management. However the statute does not specifically address low-income programs.

Cost-Effectiveness Rules for Low-Income Energy Efficiency Programs

Requirements for low-income programming are similar to those governing other programmatic offerings, and these were established by precedent in a 1997 proceeding surrounding the approval of LG&E’s DSM program portfolio. The rules for benefit-cost tests are stated in Case No. 1997-083. These benefit-cost tests are required for total program level screening, with exceptions for low-income programs, pilots, and new technologies. The commission also found in Case No. 97-083 that “If [a] filing fails any of the traditional [cost-effectiveness] tests, LG&E and its Collaborative may submit additional documentation to justify the need for the program.”

Coordination of Ratepayer-Funded Low-Income Programs with WAP Services

Level of coordination is unclear from publicly available data.

 

Last updated: April 2017

Self Direct and Opt-Out Programs List All

Duke Energy offers a self-direct program option only to customers that take transmission service on rate TT and are thus described as having “energy intensive processes” and are therefore eligible under statute for such a program. Customers in a self-direct program do not pay any of the cost of the Duke Energy efficiency programs and are not eligible to join them.  Duke does not measure or verify the savings of a self-direct program. 

Industrial rate class customer statewide are eligible to opt out. About 80% of eligible load has opted out, with the remaining 20% made up primarily of TVA customers. Documentation is not required.

Last Updated: July 2016

Data AccessList All

Kentucky has no policy in place that requires utilities to release energy use data to customers or third parties. 

Last Updated: June 2016

Transportation
Score: 1 out of 10
Transportation Summary List All

Kentucky has not focused its efforts on policies to encourage energy-efficient transportation besides creating a state freight plan, leaving significant room for growth.

Tailpipe Emission Standards List All

No policy in place or proposed.

Last Updated: July 2017

Transportation System Efficiency List All

Transportation and Land use Integration: No policy in place or proposed.

VMT Targets: No policy in place or proposed.

Complete Streets: No policy in place or proposed.

FAST Freight Plans and Goals: Kentucky has a state freight plan, but it has not been updated since 2007 to meet federal requirements, and it does not identify a multimodal freight network nor include freight energy or greenhouse gas reduction goals.

Last Updated: July 2017

Transit Funding List All

No policy in place or proposed.

Last Updated: July 2017

Incentives for High-Efficiency Vehicles List All

No policy in place or proposed.

Last Updated: July 2017

Equitable Access to Transportation:
Kentucky does not have any state programs in place to incentivize the creation of low-income housing near transit facilities, but it does consider the proximity of transit facilities when distributing federal Low-Income Housing Tax Credits to qualifying property owners. Last Updated: July 2017
Appliance Standards
Score: 0 out of 2
Appliance Standards Summary List All

Kentucky has not set appliance standards beyond those required by the federal government.

Last Updated: June 2017