Climate and energy

(This post will be updated throughout the morning.)

8:00 a.m.
Hi there – this is Eileen Horn of CEP, blogging live from the Old Supreme Court Room in the Kansas Capitol building (Room 313 South). Today is the first day of the hearings on HB 2711. The proceedings officially begin at 9:00 a.m. Today and tomorrow, supporters of the bill are presenting their arguments. The Senate is holding hearings simultaneously, in Room 526-S. Wednesday and Thursday, opponents of the bill will present their testimony.

My goal today is to record the main points of the House testimony for you. Later today or tomorrow CEP will also facilitate a fact check. Sierra Club is videotaping the hearing as well. CEP will be live blogging from the Capitol all week. The committee votes are currently scheduled for Friday.

If you want to refer the text of the bill as we go along, click here. If you want to refer to Gov. Sebelius’s response to the legislation, click here.

9:00 AM CST

Chairman Holmes calls the hearing to order and distributed a handout with existing KS coal plants, detailing MW and CO2 for each plant. The second page is a background piece about the Holcomb expansion- with expected CO2 emissions.

Earl Watkins, President and CEO of Sunflower Electric-

Believes that this legislation will allow Sunflower to serve their 400,000 Western KS customers with the regulatory certainty they need.

Proposing to build the cleanest coal plants in the United States. The new plant will be the cleanest in KS. Will utilize 700,000 tons less coal than if they had been built with the old technology.

Cited poverty statistics of the 400,000 W. Kansans they serve. 54,000 are below the poverty level, therefore an increase in energy bills can be trying.

Wind and biofuels industries can only be achieved with reliable energy generation (presumably coal).

If we seize this opportunity, we can stop the outmigration of young Kansans, providing jobs and inexpensive, reliable electricity.

The proposed plants meet all emissions standards and all standards- confirmed by KDHE. This expansion has state-of-the-art pollution control technology.

Cited technological innovations in 2003 to reduce mercury emissions.

Sunflower has conducted phase I of experimental tests of algae reactor. The algae will produce biofuels, starch, and protein for animal food.

Sunflower has advanced wind power in KS. Has contracted 125 MW of wind in KS (13% of peak).

Saying “no coal” is irresponsible. Today, coal is the least expensive resource for baseload energy. It provides 53% of Sunflower’s baseload power.

The expansion is a step towards cleaner coal technology.

Sunflower does not believe that energy efficiency can meet need for electricity in KS. Higher electric rates will ripple through the KS economy. The price of all goods will increase.

Refuting the “the energy goes out of state argument”: Sunflower is committed to providing low-cost power to Kansans, therefore the two plant plan is the best way to do that. The $95 million from Tri-state and Golden Spread makes this financially possible. Without this upfront financing, the plant construction is not economic.

The project is about more than coal plants: expands transmission to enable wind power (up to 1500 MW to the east and south), opens 3000 MW of wind to the more lucrative western market, jobs for Kansans, out of state funding for the bioenergy center (ethanol, biodiesel plant, algae reactor, etc.), railroad improvements. The bioenergy center will create 200 jobs. The sunflower plant will provide 280 jobs (akin to a 4,000 job project in JoCo).

Secretary Bremby’s decision was without rulemaking, without due process, and without the legislature- without clear public policy and certainty- there is no predictability, no stability and no progress.

Our project met all standards. The secretary’s decision was based on no known rules. It was unlawful because he unilaterally changed policy (which Sunflower believes only the legislature has the authority to do). Public policy should be set by the legislature.

HB 2711 restores certainty, public confidence, provides a clear understanding of state’s energy policy. CO2 mitigation is possible under this bill and puts KS at the forefront of carbon regulation.

Bill Wearham, attorney from Washington, DC-

Will be presenting about the federal Clean Air Act, and KS 65-3012.

Section 3012- the “emergency provision”

The bill (2711) reinforces that section 3012 was never meant to be invoked in the permitting process- only for “extraordinary” pollution events. Section 3012 was originally enacted in 1967- a time of extreme pollution- burning rivers, etc. There is nothing in the history of 3012 that suggests that it applies to anything other than emissions from existing power plants.

Section 303 of the Federal Clean Air Act was also enacted in 1967. KS legislators in 1967 were aware of section 303- and 3012 and 303 have similar language. Federal law requires that an emergency provision similar to section 303 be part of state law.

In 1990- amendments to CAA- expanded section 303 to include protection of the environment. 1993 revisions to 3012 reflect the change in scope- from a focus on human health to now include protection of the environment.

At the federal level, the permitting process is completely separate from the emergency provision. There is a clear division between the permitting provisions and the emergency provision.

The text of 3012 indicates that it should only be applied to existing sources of air pollution. History of implementation also provides clear proof that it is only for existing sources. At the federal level, section 303 has also only been used for emergency provisions, not permitting.

2711 reflects the history and meaning of 3012.

Brian Moline, Alliance for a Sound Energy Policy-

Diverse membership of the alliance all agree- a balanced energy policy and regulatory certainty are necessary.

It is the concern about regulatory certainty and security have brought these groups together (KS Chamber of commerce, AFL-CIO, etc.)

Sensible energy policies are necessary, and the aim of the ASEP is to contribute to policy for affordable, diverse and reliable energy policy.

Most notable: consensus of the diverse coalition of members of ASEP.

Quoting a member of ASEP (on the decision): “Every regulated industry in this state ought to be scared to death.” [by Secretary Bremby's decision]

9:45 AM

Tri-State Representative-

(Was vice-chairman of Natural Resources committee in 1993)

Senate bill 29 of 1993- amended 65-3012. KDHE didn’t want the authority, didn’t intend the authority beyond what EPA required. Their goal was to keep KS in line with EPA regulations.

Sierra Club opposed the bill because it didn’t allow KDHE to exercise its full power.

Clearly, the concern during the 1993 amendments was to be sure that KS stayed in line with EPA requirements, and retained KDHE’s primacy in these matters.

*Chairman Holmes just agreed- he also recalls that the purpose of that amendment was to keep up with EPA requirements, not more.

AFL-CIO Representative

Technical education and apprenticeships are central to our mission. Jobs are our central mission and focus.

KS AFL-CIO would prefer that KS lead the way in producing energy and protecting the environment. KS bill 2711 does that. Our focus on this, and any other bill is jobs.

Questions:

Rep. Svaty- why does Tri-State want to come invest in KS? When arguably, eastern CO needs it just as much as western KS?

Tri- State Representative- Answer will be provided in tomorrow’s testimony. Partly, it is due to potentially being up and running faster in KS than CO. Now that doesn’t seem to be the case.

Rep. Light- What about the argument that only one power plant is needed to meet KS needs?

Earl Watkins- Sunflower is a not-for-profit cooperative and doesn’t have the equity to build this plant. Therefore, sunflower needs revenue from the out-of-state power. If it’s a single plant project, we cannot afford to build it. If it’s a single plant project, only Tri-state will be able to afford it- and all power will go west to CO. We’ll lose energy for KS and we’ll lose transmission. It will build power and transmission for CO.

Rep. Sloan- What transmission constraints do you face today?

Earl Watkins- We’re forced to run our older gas-fired plants to meet need (when electrons can’t be bought from the eastern part of the state, NE, etc.) It’s good news that postage stamp recovery may be passed by the SPP and then ITC Great Plains might build transmission. If this plant is built, then transmission lines will be built.

Rep. Sloan- Can you elaborate on the financial situation Sunflower is now in (that makes it impossible to build the single plant today)?

Earl Watkins- Economy went south rapidly in the early 80s (when the first sunflower was being built). Their situation: fewer ratepayers paying more cost. Therefore, we don’t have equity that others (i.e. Tri-State) have.

Rep. Sloan- Tri-State issued an RFP- how did Sunflower win that bid?

E.W. Sunflower won the RFP because our project was significantly ahead of any other in the region. We had water, rail and a workforce in place. One thing that troubles me: If we only produce energy for KS, then will other states choose the same? And then when our plants are down, where will we buy our power from? Currently we buy from NE and other states when our plants are down. This partnership allows us to produce power at $2700/MW. If we built a stand-alone it will be $5400/MW.

Rep. Sloan- Did KDHE recommend the issuance of the permit?

EW- yes, as I understand it.

Rep. Annie Keuther- What kind of jobs would come with this plant? where’s the shortage of workers?

Mr. Sanchez, AFL-CIO- A project like Holcomb would create a need for jobs, but also create a training ground for technical education and apprenticeships.

Rep. Keuther- Is Sunflower making a commitment with the unions?

E.W.- No, there are no contracts with any particular organizations. Sunflower plants are unionized and have a good relationship with labor. As does Tri-State. We’ve let the contractor know that we have a KS preference, but there are no contracts with KS unions.

Rep. Svaty- How much wind would you need to offset coal? (more or less the question :)

E.W.- need 2:1 to offset CO2. For example, 1400 MW, needs 2800 MW of wind.

R.S. in your testimony, you quoted 4500 MW of wind. Therefore, you could offset 2200 MW of coal.

R.Svaty- As chairman of KCC, this bill removes authority of KCC to watch rates of utilities. How do you feel about that?

Brian Moline- Our coalition hasn’t taken a position on the issue. But, since you asked me what I think: In 15 years, no one has tried to get the KCC to review the co-op boards when it comes to rates.

Rep. Mast- Could you explain the importance of going back to the legislative intent in a bill?

Tri-State representative- It is incredibly important (especially as a former legislator).

Question (can’t see nametag of representative)- Are CO2 regulations coming down the pike?

Wearham- Mass v. EPA said two important things: 1. GHGs are air pollutants under CAA. 2. The administrator doesn’t have unbridled discretion. The administrator must find that endangerment must be found to exist.

The court said to EPA, you can: 1. Find endangerment, 2. Find that there is no endangerment and 3. Decide not to decide based on lack of information. That’s the task before the agency right now, and they’re still working on it.

EPA is not in the business of regulating GHGs right now, but have a task in front of them.

Rep. question: Would you venture a guess?

Wearham- it’s a complex rule and regulation, it’s not easy. My judgment is that if they got it done in another year, it would be lightning speed.

Rep. Moxley- This bill asks for substnatial reductions in CO2. Will the reductions be done in the plant physically, or will it be done with offsets?

E.W. there is no carbon capture technology available today to put on a plant. We’ve got 5 years to explore technologies. If the algae reactor works, we can physically remove CO2. If not, we have other sequestration opportunities- conversion to pastureland. It is not our intention to ever write a check to the state (for the emissions).

Rep. Moxley- Years ago, you had plans to build a single plant. How did you intend to finance it then?

E.W. An out-of-state utility would have owned it.

Rep. Moxley- So, none of those entities decided to build it then?

E.W. No, they did not.

Rep. Myers-Without these two plants, what are your purchase plans to supply electricity to your grid?

E.W.- If this legislation doesn’t pass, and there is no construction of the plants, we have been looking at out-of-state regulations to bring it in. It would be heartbreaking to take those jobs from the state. The next optimal solution is to look at additional gas generation, but the cost of gas generation to our consumers is significant. In 2007, coal was 4.4 cents and gas was 8.8 cents. I’m worried about supply, cost and volatility of gas generation.

Three options in order of priority: Holcomb, out of state, natural gas

E.W. – over the next 10-12 years, we hae a need for 400-500 MW. If there is a delay, it kills this project. We have to be thinking about how to serve those folks.

Rep. Moxley- In your time with the EPA, was CO2 considered a pollutant for human health or only an emission that contributes to climate change?

Wearham- Initially, CO2 was not considered a pollutant under the Clean Air Act. Supreme Court decided that CO2 is a pollutant and now the EPA and federal gov’t must now decide how to move forward. (cited the three alternatives given in an earlier statement)

Rep. Keuther- How many employees will these plants bring?

E.W. expect to hire 110 additional employees to manage the next 2 units. Our consumers will save $4million (as now one worker = 3 MW. With expansion, one worker= 7 MW).

Chairman Holmes- If Holcomb isn’t built, how many MW of coal do you have after 2019?

E.W. In 2019, we lose Jeffries, we would have 360 MW.

Rep. Light- (to Mr. Watkins) It is essential that we have your financial information about the difficulty of building the single plant, as many opponents of this bill are suggesting the construction of one plant.

Rep. Light- Are there any other states that have had their Secretary or someone outside of the legislature act on 303 (or analogous state provisions)?

Wearham- Not to my knowledge. Survey in 2002 by NACA, and at that time, 26 states had the authority to exceed the EPA regulations.

Rep. Mast- If the EPA has the ability to legislate tailpipes from cars, can they also do that for cows? And therefore, if the Secretary continues to have power to do what he did, can he also regulate cows?

Wearham- There are multiple sources of GHGs. The prospect of actions directed at livestock emissions is real- real on a voluntary perspective, as there are programs to reduce livestock emissions through feeding programs.

Rep. Sloan- Should the KDHE apply 65-3012 to all new permits, say for ethanol plants, etc?

Wearham- If there’s concern of a small fraction of US emissions (i.e. Holcomb), it is my opinion that it would apply to all.

Rep. Moxley- You gave us three options (find endangerment, not find endangerment, or need more time), in my recollection, the president has gotten on board with GHG emissions.

Wearham- The current administration has worked for 8 years on this issue. The administration has been working on common sense, economic steps.

Rep. Moxley- if the president has been working on this for 8 years, then this in fact NOT a sea change.

Wearham-Real quickly: the administration has never created mandatory measures, and the current regulations under consideration are a result of Mass v. EPA.

11:00 AM-

Hearing is adjourned… and I have much more empathy for people who transcribe for a living :)

Attention all bloggers/media: Please help us research the many issues that were brought forth in this landmark hearing!