Owensboro Municipal Utilities officials are urging OMU employees to avoid rushing to decisions about their job status with the utility as a result of potential changes to Kentucky’s public employee pension system, which covers OMU workers.
“We’re encouraging employees not to make any decisions on retirement until we know what the program will look like,” Terry Naulty, OMU’s general manager, told the utility’s board of directors on Thursday during a staff presentation on the impact of government regulations on OMU, which includes everything from complying with a multitude of environmental rules to making sure drinking water is properly treated.
The financially troubled, underfunded state pension system is a hot topic in Kentucky right now, with a special session of the General Assembly coming probably in November to consider legislative solutions. Last week, PFM Group, a consulting company, recommended sweeping changes to the pension systems, such as increasing the retirement age for teachers and law enforcement officers, and placing new teachers and nonhazardous public workers into 401(k) retirement plans.
But on Thursday, Sen. Joe Bowen of Owensboro called the PFM recommendations “draconian,” and said not all of them will be implemented.
Michael Moore, director of customer service and shared services at OMU, told the board that the defined benefit components of the state pension system helps the utility recruit, and that many of its top tier workers retire between the ages of 50 and 55. He questioned what might happen with current employees if the retirement age is raised to 65.
“The recommendations were pretty severe,” Moore said.
Naulty followed by saying that OMU employees are being told that any changes made by the legislature would not take effect immediately and they will have time to make decisions.
“Nothing is currently proposed,” Naulty said. “We won’t see it until the special session. … There is no guarantee that anything PFM recommended will be enacted.”
OMU is already concerned about losing valuable employees at the Smith plant because of its recent decision to stop burning coal completely by 2023, and has proposed a pay incentive plan to keep them on board through the end of coal-fired production. Doubts about the pension plan may put additional pressure on critical OMU employees to consider career options.
Moore said OMU will be kept informed on any pending or recommended legislation by the Kentucky Municipal Utilities Association.
As for other types of state and federal government regulations that require rigid compliance by OMU, the list is long, said Kevin Frizzell, director of production.
“Multiple programs apply to us,” Frizzell said. “Many overlap and we have to comply with all of them. We have to do a lot of monitoring and testing of everything that comes out of the stacks, and we submit a lot of reports to agencies.”
Just in the last year, OMU has had to comply with new mercury emission regulations, Frizzell said. When burning coal at the Elmer Smith Station power plant, OMU can emit less than 30 pounds of mercury per year, which is about a 90 percent reduction. OMU’s new equipment is performing well and has passed certification testing, Frizzell said. But controlling mercury alone costs OMU $4.5 million a year out of a total budget of $12.8 million a year for environmental compliance costs.
“It is a very challenging program for us,” Frizzell said of the mercury program. “It is very expensive. It’s four different programs working together, but we are in compliance.”
OMU spends $1.2 million a year on permitting fees, emission allowances, monitoring, sampling and reporting. And it spends $3 million a year managing the highly regulated byproducts of coal generation, such as disposing of coal ash, some of which ends up in the Daviess County Landfill.