The following is a transcript of the July 21, 2025, episode of Public Power Now. Learn more about subscribing to Public Power Now at Publicpower.org/Podcasts. Some quotes may have been edited for clarity.
Paul Ciampoli
Welcome to the latest episode of Public Power Now. I'm Paul Ciampoli, APPA's News Director. Our guest on this episode is Doug Buresh, President and CEO of the Kentucky Municipal Energy Agency, a joint action agency. Doug, thanks for joining us.
Doug Buresh
Thank you for having me.
Paul Ciampoli
Doug, just to get our conversation started, I'm sure most of our listeners are aware of Kentucky Municipal Energy Agency, but just for those who may not have a lot of information in terms of what you guys do, could you provide an overview of the Kentucky Municipal Energy Agency?
Doug Buresh
KYMEA is a joint public agency established in September of 2015 by municipal electric utilities across Kentucky. The organization's mission is to deliver reliable and cost-effective electric power and energy services to its member communities.
Through KYMEA, members collaborate on energy procurement, infrastructure development and strategic planning, thereby achieving efficiencies and collective influence that would be challenging if they tried to do that individually. We began operations in May of 2019, so we were established in September 2015. Operations began in May of 2019 and we currently have 11 all-requirements members and I believe we are probably the newest joint action agency in the country.
Paul Ciampoli
One of the things that we've covered in our newsletter is the fact that that KYMEA has been steadily adding all-requirements members that it serves, most recently the City of Olive Hill, Kentucky this year.
Against that backdrop, what are the key benefits that KYMEA offers to its all requirements members.
Doug Buresh
Yeah, that's a great question. Primarily what everybody looks at is rates. So the last three new members we added, the primary benefit has always been low rates. KYMEA offers wholesale electric rates that are among the lowest compared to other municipal providers in Kentucky and neighboring states.
For each new member we have added, low rates have been the key consideration for joining KYMEA. A second benefit is stable rates.
Prior to forming KYMEA, our members had great frustration within their communities with their previous power supplier due to the monthly power cost adjustment. So each month their power bill was swinging up and down and that caused great frustration for them.
To address this, when they formed their own agency, they created a rate stabilization fund, which provides or absorbs the swings in the monthly energy prices while balancing and achieving key financial metrics.
The rate stabilization fund has worked very well, essentially eliminating the need for monthly power cost adjustments as KYMEA has had only two power cost adjustments in our first six years of operation. And again, this is a key factor for both our existing members and as we added new members because everyone has that same frustration with the swings in power prices.
The third one is an additional advantage of joining KYMEA is the ability of our members to determine their own strategic direction.
With autonomy over its power supply portfolio decisions, the members chose to add cost effective solar generation to our portfolio, resulting in 12% of our portfolio being supplied by solar energy. The solar energy provides an effective hedge against price volatility.
So those are the three key factors that I believe new members look at. Rates were always one, stability number two and being able to make your own decision is always something that interested any new member and our existing members as they formed the agency.
Paul Ciampoli
So the follow up question that just popped in my mind is could you briefly describe the process of adding an all requirements member?
Doug Buresh
So currently we like to go to our member communities and visit with them and have them get to know us and we get to know them. And what we've always told any new member is we want this to be a good strategic fit for both them and us.
They have to be committed to saying -- now that I have control of my own power supply, am I willing to serve on a board, attend committee meetings, and be able to make those own decisions? And it's usually some resounding yes, I'd sure like to have that capability.
So, first of all, we get to know each other. Secondly, we like to explain what our rate structure looks like, who our existing members are so they can get to know each other.
And that relationship, I think, it's lended itself well to anyone who joins has been extremely happy with the decision they made and for our existing members, they got to know the new member before they ever came on board.
Paul Ciampoli
As you know, Doug, in late 2024, KYMEA announced the launch of its Carbon Free Choice program, which allows KYMEA all requirements members’ retail customers to purchase up to 100% carbon free energy. So I wanted to give you the opportunity to tell our listeners more about this program.
Doug Buresh
So earlier I mentioned our adding solar portfolio, so we added 86 megawatts of a large solar plant to our portfolio, Ashwood Solar One, in addition to our existing hydropower that we have of 32 megawatts.
So putting those together, about 16% of our energy portfolio is comprised of carbon free resources, so this allowed us to kick off a program that we call Carbon Free Choice program. Some of the basic details of it are the carbon free energy which we sell in blocks is available to our members’ customers. So we sell it to our members, they sell it to their customers.
The interaction we have is helping educate the customer if they have any questions from the agency's point of view. We have approximately 233,000 blocks available annually, where one block is equal to 1,000 kilowatt hours. Each block is certified and tracked using the Midwest Renewable Energy Tracking System, also known as MRETS. And the carbon free energy is available on a first come, first serve basis with a minimum participation of one year.
Our members’ customers really appreciate the idea that the solar and hydro facilities are based in Kentucky, often right down the road from where they are located at.
We have hydro facilities scattered along the Cumberland River that they could visit if they wanted to set up a tour and our solar facility is on the western side of the state, so they know we [are] providing locally sourced carbon free energy. We've really had a great success already with this program.
One of our member customers is a Fortune 500 company aiming for carbon neutrality at all their locations. So they have a lot of facilities around the world and to be carbon neutral, this facility said we'll start off at 50% through the Carbon Free Choice program this year and they plan to make it all the way up to 100% in 2026. This facility will be the first in the world for this Fortune 500 company to achieve this 100% carbon neutral milestone.
So being from a coal state like Kentucky, we're pretty proud of the fact that we will be able to be the first to achieve this for this customer.
Paul Ciampoli
So Doug, a quick follow-up question if I could. You talked about educating customers as it relates to this program. Could you give some further comment on how KYMEA may work with its all requirements members to provide that education to customers?
Doug Buresh
Yeah, we had a couple things. To kick it off we put together a brochure -- so there's a nice one-page brochure that explains it. In addition, we have it on our website, so there's a way to describe it as well, so initially if customers just want some general information, they can point to those two areas. From there, we have face-to-face meetings that the member requested with them and their customers and we've done several of those.
And when we met the customers, what's always come about was the customer would say we know we can go out and buy RECs on our own, but we really want to be tied directly to a physical asset that we can say this is carbon free and we can point to it and we can say this is what we're purchasing from.
So having Ashwood Solar One coming online in addition to the hydro resources that we have, we're able to point directly to those assets and I think that's helped both educate the customer and give them some ease. They're not just buying some kind of a vapor REC, so to speak, off the market, but really a tangible asset they can point to and show everybody this is what we're getting our resources from.
Paul Ciampoli
And to your point about tours, I'd imagine that helps too.
Doug Buresh
It does. We’re really happy to have the tours. We just had our ribbon cutting for the solar facility so the tours are just getting set up. Many of the members have already had tours of the hydro facilities – they’re able to go down and see how the inner workings of a hydro facility work. Since those are scattered around the state, there are several locations that are close to each of our members.
Paul Ciampoli
Doug, my final question for you is I wanted to talk about KYMEA's current generation portfolio and discuss KYMEA's modern portfolio theory, which I'll be honest with you, I hadn't heard of this before. So I wanted to know if you could talk more about how KYMEA goes about assembling its power supply portfolio?
Doug Buresh
Let's start off with our current portfolio.
We have a mix – and it’s all through purchase power agreements right now -- a mix of coal from various sources with various timing, peaking natural gas, solar and hydro, which I just mentioned, and a small diesel generation through one of our members, so this is our current portfolio.
Let's talk a little bit now about modern portfolio theory and how we use it. So modern portfolio theory offers a quantitative approach for creating a group of assets with the aim of either maximizing expected returns at a certain level of risk or minimizing risk for a specified expected return.
Now this dates back to the 1950s and it was mostly put in place for investment portfolios. I've been doing resource planning for coming on 35 years now and as I've gone through the various planning stages it's evolved to this rather sophisticated approach because we now have models that can support those kinds of techniques.
Since it was originally developed for investment portfolios, well, we like to apply the same approach to the energy sector and see how finance theory supports integrated resource planning. And in our case, we seek to balance low stable rates while reducing risk. So before, if you had an investment portfolio, you're maximizing profit and minimizing risk. In our case, we're minimizing rates or minimizing cost to our customer again while reducing risk.
The theory really emphasizes three things. The first is resource diversity. So I talked before about our portfolio. We assembled a portfolio with a broad mix of environmentally responsible resources that vary in fuel type, technology, the sizing, the timing and the location.
So we like to have a lot of diversity similar to how you'd assemble investments maybe in different types of industries, for instance, and in different sectors, maybe even around the globe our same thought is to have a portfolio that varies in sizing and timing and types. The second thing is risk mitigation.
So the goal is to achieve long term low cost and stable electricity rates while minimizing exposure to market and operational risk. So this involves stochastic analysis that looks at various and also possible futures through scenario analysis, putting those two together with a hedging program that either financial hedges perhaps or even physical hedges tied to a portfolio is one way we try to look at our risk mitigation across all those different types of analyses and find a correlation.
So when people think about correlation, they're talking about the correlation between maybe two commodities. In our case, it's a correlation between both commodities and the type of assets. So selecting resources whose performance is not perfectly correlated, it helps reduce volatility.
So for example, if we had a portfolio entirely tied to a single technology or a single fuel type, that'd be very risky because if there's any changes in those fuel types or technologies that could cause some wild swings, so you could hit a home run if it works in your favor. But modern portfolio theory would suggest that you don't go for the home runs.
You balance risk mitigation with cost minimization in our case. So the use of modern portfolio theory lends itself to a concept we refer to as least regrets planning. This is a strategic approach used in our integrated resource plan to identify energy resource portfolios that perform well across the wide range of uncertain future scenarios.
So then, rather than optimizing for a single forecast, which is also known as least cost planning, we have least regrets planning that emphasizes flexibility, resilience and cost effectiveness under multiple plausible futures.
So using this technique, the board has recently decided to build, own and operate its own power plant. So this will be our first power plant that we own and operate and which will utilize natural gas reciprocating internal combustion engines, also known as RICE units. The KYMEA Energy Center One is going to house four of these 19 MW RICE engines. It's currently under construction with an online date in 2027.
So the inclusion of RICE technology alongside our coal, hydro, solar, diesel and peaking natural gas enhances our diversity, risk management and correlation balance in accordance with modern portfolio theory. KYMEA maintains that this systematic approach to resource planning is fundamental to the agency's sustained long term success.
Paul Ciampoli
Doug, I wanted to take advantage of your decades of resource planning experience that you mentioned earlier. From my perspective, in terms of what I cover for our newsletter, it seems like there's a very high degree of uncertainty as it relates to resource planning these days. I guess one of the things that jumps to mind is the huge power demand coming from data centers in the pipeline.
So a two-part question. One, do you feel based on your lengthy experience in resource planning that that's fair to say that there is a higher level of unpredictability? And second, I would imagine that any unpredictability that may be facing energy markets that the modern portfolio theory can help mitigate some risk, right?
Doug Buresh
The answer to the first part of your question -- there is a huge amount of uncertainty regarding load. And the interesting thing is -- so we've always had uncertainty around load and we've had scenarios that look at a high load growth case…and then we started getting into electrification a few years ago and perhaps that would be electric charging stations, for instance, could cause a big a jump in electricity usage, but nothing like these AI type data centers where one gigawatt can all of the sudden show up in your backyard where before there was nothing and that's a huge jump for anybody to handle, including the big investor owned utilities that have very large resource mixes and very large load. That's still very significant on top of their portfolio.
A modern portfolio theory certainly can help adjust for that. However, there's a lot of other quickness to speed to market, I guess I'll put it that way, to meet that kind of load that is very difficult in today's planning environment. It's a long queue to get into the interconnection process connected to the grid.
It's a long queue to get supply chain issues worked through and then finally getting the resource itself is a long queue as well. I think the data centers perhaps are going to come faster than the ability of the resources to meet those loads and I guess we'll all wait and see how this unfolds.
Paul Ciampoli
Right, right. Yeah, definitely an exciting time in the energy world, that's for sure.
Doug, thanks so much for this really, really informative conversation.
I really appreciate you taking the time out of your day to speak with us and would love to have you come back as a guest at some point in the future.
We could revisit some of these topics and obviously I'm sure there's a lot of other things that going on at KYMEA that we could discuss.
Doug Buresh
That sounds great. Appreciate it.
Paul Ciampoli
All right, Doug. Well, thanks again so much. Thanks for listening to this episode of Public Power Now, which is produced by Julio Guerrero, Graphic and Digital Designer at APPA. I'm Paul Ciampoli and we'll be back next week with more from the world of public power.
