FRANKFORT, Ky. — Some of the biggest names in unregulated power production got a chance Tuesday to pitch free-market electric plants to Gov. Paul Patton and his board of energy advisers.

        The companies, which include Enron Corp., Dynegy and Duke Power North America, have plans pending for about two dozen “merchant” electric plants around the state.

        The plants would be unregulated and relatively small. Most would sell electricity on long-term contracts to selected customers in other states. Many would be gas-fired, but some plan to burn coal or coal waste. Some would operate only during periods of peak demand.

        Though not subject to regulation by the Public Service Commission, all need air-quality permits from the state. Mr. Patton has imposed a moratorium on further permit applications while his energy policy board and the commission study how merchant plants would likely affect existing electric systems.

        Questions include: Who would pay for new transmission lines that would be needed? How deeply would merchant plants eat into Kentucky's “environmental credits” — federal allowances for air pollution?

        Merchant plants, which can be built more quickly and less expensively than regulated generators, are uniquely suited to satisfy sudden power demands, proponents say.

        “As far as we're concerned, utilities need to get out of the generating business,” said Samantha Slater, manager of state and regional affairs for the Electric Power Supply Association, a trade group for unregulated power companies.

        “Let us” do the generating, Ms. Slater said, and let regulated utilities handle distribution.

        Mr. Patton sprang to the defense of a regulated market, which he said is not without problems but also not prone to wildly fluctuating energy prices.

        If even a third of all proposed merchant plants were built, electricity would become “cheaper than dirt,” and some power companies would not survive, Mr. Patton said. “Then all of a sudden, people wake up one morning, and it's like California” — wracked by outages as utility companies fell into financial turmoil.

        Mr. Patton also said Kentucky ratepayers should not be billed for the cost of new transmission lines merchant plants would require — a position held by Kentucky's regulated utilities.

        Ms. Slater said her association agrees that users of the electricity should pay for new lines. So did representatives of some of the potential developers, including Frank Brayton of DPL Energy, an unregulated affiliate of Dayton Power & Light in Ohio, and Doug Colbeck of Duke Energy.

        DPL Energy has proposed to build a gas-fired plant near a Texas Gas transmission line in Breckinridge County. Duke Energy is developing a site in Marshall County and considering a second site in Metcalfe County.

        All the companies said the same thing about locating in Kentucky: The state has a multitude of sites that are near gas pipelines and electrical transmission stations. “We try to find sweet spots,” Mr. Colbeck said.

        The debate is to continue in at least two more hearings before the energy policy board and one before the PSC.

        “We want to make sure Kentucky is served first,” Martin Huelsmann, chairman of the Public Service Commission, said in an interview.

        If a major independent wants to sell electricity to New York or Florida, “that's fine as long as the native load is served, and the lights come on in Kentucky.”

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