Climate and energy

Hi all. What a day. Now we are in the hearings on HB 2949, the Kansas Energy Act Plan that proposes to set a framework for future Kansas energy policy by focusing on dispatchable and baseload power. Six folks are scheduled to testify.

Members of the committee include: Rardin, Faust-Goudeau, Light, Olson, Myers, Flora, Watkins, Proehl, and Whitham.

We Await the Committee. The Room Is Full. Overflowing. Past Capacity. I hear fire sirens outside (actually not kidding). Today is Clean Energy Day of course, and GPACE and Sierra Club, etc., have done a marvelous job of outreach to local constituents interested in the energy future of Kansas. Which this bill does address.

Hit your refresh button occasionally so you can check in with us.

:) Overheard: someone talking about a t-shirt – “The Planet: It’s not just for treehuggers anymore”

Another overheard – “Why isn’t wind included? The wind folks signed up to testify then got kicked off, and this is supposed to be the Kansas Energy Plan. Isn’t that all of us?”

That did not come from the committee. NOW we have the committee.

Chairman Myers starts the meeting

Earl Watkins, Sunflower Electric

Kansas needs a sound energy policy. By any stretch of the imagination Sunflower is a small utility. Economy of scale is important to us, to keep costs down. Our Holcomb project – our 20oMW slice – is how we can afford to build generation capacity. Planning ahead and working with other utiltiies is importatn.

We think the generation mix in this bill is hard to meet. We need some choice and flexibility. State needs to undrstand that fuel mix choices will be guidelines and not firm policy decisions. Also any long range planning needs to understand what regulatory rules are, because we are all building behind the load curve.

Coal is in the middle of a cycle – lots of plants were planned, now onlu 26 are under construction. There’s a lot of uncertainty. With uncertainty, we need to know the rules. Lots of shifts in public policy. TX wind got into trouble, some baseload wasn’t there to back them up, lots is changing. Also these terms like baseload, etc., will change over time. Interruptible service got cut off. Customers who sign up for interruptible really like the price, but they don’t like to be interrupted. We shouldn’t rely on interuptibility to provide load, we need to make sure consuemrs really understand what is going on. We also need to ration our available resources better. If we don’t build for load growth, then we have to decide who gets their power cut – hospitals, schools, residents, who.

Need to look at natural gas. KCC needs to look at feasibility of requiring these facilities to have dual fuel capability. We might need it. Committee also needs to think – you might need policy in place where KS plans and finances next nuclear plant – I don’t think we can afford it as utlities. We need to look at the costs and risks very clearly, and if we decide that nuclear is our most affordable and environmental baseload choice then the state needs to build it, and utilities purchase ownership interest, and othrs who can’t afford that buy the power. Utilities in KS can’t afford nuclear on their own.

Finally, recognize that a power plant without transmission is not viable. If you want to expand the charge of KETA, that might be a thought.

(He then explains the attachments on his testimony) points out resource of wind, its typical variability compared to the load curve. Have to chase the wind with gas to fill in the gaps for load. Also, demand rises fast. 3.3% last year, even on days when the ice storm had our system on the ground. More typical is 4-5% growth.

Myers – what is cost per megawat hour, gas v. coal

Watkins – for 2007, 1.4 cents per kilowatt hour for coal, about 9 cents for gas units. If you add capital costs, 4.5 cents for coal, about 10.5 on gas.

Myers – a significant increase, especially if you use gas to back up wind power

Watkins – in my experince you have to use gas to chase coal, there’s no other way

Rardin – chart of Gray County wind output that you show us – over what number of days does this take -

Watkins – this is average of days. It came online in 2001. Smoky Hills will have higher production level, it only came online in mid-January

Rardin – so you got this chart by averaging all the years of data

Watkins – well, no, I’m not sure he said – I asked for an average day – I am just trying to show the volatility

Rardin – is this just a day

Watkins – yes.

Rardin – so this isn’t averages

Watkins – no

Rardin – thank you.

Flora – in the bill, it defines terms, intermittent, etc. Are these terms of the trade?

Watkins – in the business we talk about it – internally, I think we all have our own operational definitions on these terms. Problem is that a peaking resource can become an itnermediate resruce, which can become a baseload research. Its very hard to pin these down. These also vary by utility.

Flora – so if we had a ballon to work on this bill, would you have duggestions -

Watkins – I would not say that baseload includes coal, nuclear hydro – it coudl also include natural gas

Flora – section 3 – it says the legislature shoudl repeal laws and public policies that restrcit development of fossil fuel and nuclear. Do you know of any of these laws that you think they should be repealed?

Watkins – we think SB 327, to the extent that it sets rules and regs for planning, is important to have -

Flora – is this a general statement, here, in this section

Watrkins – I dont know where the language came from

Flora -what technology is Holcomb planning to use in new proposed plants to control mercury

Watkins – we were participants in a study by a COlorado company that injected activated carbon into flue gas stream to capture mercury- we got national award from EPRY, so did Westar

Flora – what level or percentage of mercury can be removed with this technology

Watkins – I can get you the details – 80-90% reduction is possible

Flora – and then the flash can’t be used in cement

Watkins – not as usable, no

Jim Ludwig, Westar Energy

Submits Westar’s larger strategic plan. (or find it here) Hopefully it can also spur conversation in state about energy policy. Hrd to find correct balance, hard to pursue right technologies, hard to provide good service to customers, hard to protect environment. We have to find a balance between all this.

turn to page 28 of plan. check out our load growth. 1.5%. Our methodology for predicting this has been established through KCC staff, we have some level of confidence in our forecasting. Although we;re not sure how to meet demand.

Page 29, table 3 – see some of the cost data regarding new capacity – how they compare. Cost and capacity factor both matter. Ie, Westar will add 300 MW to our system. Will do it by spreading resource around state, to get wide selection of wind. Wind is variable, we have to back it up, and it is best served by gas. We need natural gas to pursue wind. (MH note – this table does not include any carbon cost projections)

Westar already has to make major investments to stay environmentally compliant. (MH – I’m leaving out a lot here – take a look at the plan) Westar is committed to wind. But they still need baseload. they might think about combined cycle natural gas. Westar is in different planning cycle than Sunflower or KCPL – they don’t need baseload right away, but – load continues to grow. The more energy efficienct appliances and gadgets get, the more of the consumer buys. Some houses now have more television than occupants. And you probably have more little LED lights glowing in your house all night. Appliances are more enegy efficienct, but we just use more and more. For energy efficiency to be effecitive in moderating load, we hav eto make it not result in using more energy. It;s not all about tchnology, it’s about behavior, And behavior is a hard thing to change.

On legislation – be really careful about finalizing fixed percentages into law, even if they are only strong suggestions. Ie, none of us can afford a new nuclear unit – none of the utilities. Very hard to project some of these fuel mix questions. Respect the differences between the planning horizons and needs among the different utilities. DOn’t fix these things in statute.

Larry Holloway, KCC

Much of the info in this bill is based on my testimony to committee a while back. KCC wants to clarify its position. Data provided came from EIA and SPP, we just provided a report. We werent trying to make a policy statement on behalf of KCC. The definitions in the legislation are correct, but these might change over time depending on fuel costs. Ie, if price of gas changes over time, they might become baseload units, ot peak units. These things change over time. There might be unanticipated consequences to this legislation. Also need to consider environmental costs and benefits.

MH: NOTE – RALLY WITH GOVERNOR AND LT. GOVERNOR IS GOING ON IN CAPITOL AT 2:30. CEP will stay in this hearing, but Clean Energy day participants should leave now to go hear the Governor.

Back to Mr. Holloway. (Sorry about the public service announcement) oops he’s done

John Grimway, KCPL

He developed KCPL comprehensive energy plan. Applauds committee for trying to develop balanced energy plan. However, with the uncertainty facing energy planners today, we need to keep more options on the table. We face a lot of uncertainty today. Concerns about long-term viability of fossil fuels, not a lot of clarity on what is going to happen.

However, this uncertainty is not all negative. We have seen lots of techological developemtns, and we can help our customers use energy more wisely. We just don’t know when some technologies will be available, and which ones will best serve our customers. Hard to predict for 20 years for now.

Lots of debate over climate change, and greenhouse gases. One such bill in the Senate – Warner-Lieberman – we would have to reduce levels signficantly below 2005 levels. If this bill passes, planners will try to figure this out with renewables, smart technology, possibly nuclear. What are intermediate and peaking resources today could become baseload tomorrow. Our coal plants imght become too expensive to operate efficiently under certain conditions.

Faced with uncertainty, we need to keep our options open.

Nancy Jackson, Climate and Energy Project

I want to just get up here and say ditto – a lot of my testimony has alrady been said. (MH – I can post this later) We have lots of demand, aging infrastructure, we need to make hard decisions. Also, our energy choices are wrapped up in our envirionment, and healt, air, water, our children. Also we have concerns of energy security.

Bulk of 2949 talks about baseload, not our overall energy picture. The difficulty is that today’s fluid economic environment makes it hard to predict what will happen. Competitions for resurces like coal and uranium will occur. Baseload is hard to predict. Lots of study is going on regarding integrating wind, for example. Pressing environmental concerns also make it hard to predcit resource mix.

Suggested resource mix in this bill is not a wise move at hthis point. A new nuclear plant might be the goal in part of this bill, but we don’t have enough information yet. CEP supports a comprehensive planning effort for energy. We hope the committee avoids putting this mix into law. We also respectfully submit energy efficiency as an option that needs to be more explored.

Margaret Thomas, KNRC

KNRC disagrees with fuel mix percentages in this bill. Climate instability is rapidly approaching, along with depletion of freshwater resources, etc. We need a quantum shift in our energy vision. No new coal generation without carbon capture, no new nuclear without safe waste disposal and less water use, a laser-like focus on wind, education acors KS on the meaning of carbon footprint, and the urgent need to lessen consumption.

The groups you have seen here today, with our stickers, are committed to more than a short-term solutioon. The Kansas energy economy will be closely watched now and in the next election, We appreciate the difficulty of your taks, but we are here to help.

Questions?

Rardin for Jim Ludwig on Westar testimony – costs of nuclear are pretty prohibitive right now, on high end of costs per megawatt hour – you didn’t put that in your report.

Ludwig – we consciously did not. There’s a lot of surmises about nuclear costs – no one knows. Its been so long since one was built – we would have to get engineers and materials from France and japan – hard to get reasonable cost estimates. Couldbe around $5-$7 billion – but that might not be reasonable. Paul genoa, whom you mentioned – he knows as much as anyone does.

Rardin – what sort of energy savings, retrofitting, could be applied to Westar infrastructure

Ludwig – westar has done a significant job in extracting more power from resources than was expected. We get higher capacity factors than you would expect. Same with coal and nuclear. Lots of eneergy efficiency improvements. Some other things – we could improve transmission as well. Some of the efficiency on the transmisson and generation ends can save more than on consumer end. I believe in energy efficiency for consmers – it can happen.

Rardin for Grimley of KCPL – you said there is debate about global climate change and what if anything shoudl be done about it. Do you not accept the preponderance of science regarding global cliamte change – anre you saying its debatable?

Grimley – there’s a debate legislatively about what needs to be done – in this state and perspective – from planning perspective, it is the single most component of uncertainty we deal with today, trying to figure out what mitigation is coming. How to figure out environmental retrofits, for example, how to get into technology that is meaningul -

Rardin – do you have any estimates of energy efficiency retrofits, out there for the taking for KCPL?

Grimley – on residential basis we are taking steps and implementing programs, some commercial programs as well. Each program is uniquely designed. We need to get our customers on board as well,figure out the costs, how to spread the costs across the rate base- we are diligent.

Rardin – estimates of aggregate potential out there for savings?

Grimley – I’d rather not – maybe 300 MW of demand reduction. Some of it is peak reduction some of it is reduction in other places.

Faust-Goudeau for Earl Watkins, Sunflower – on page 2 of your testimony at the bottom where you talk about opponents of coal plants still reaping the benefits of those facilities -

Watkins – changing a policy today about coal does not change baseload mix of this state, which runs on coal. Those in eastern KS are served by coal plants.

Adjourned.

— Maril Hazlett, www.climateandenergy.org