Climate and energy

by Nancy Jackson, Executive Director

Mr. Chairman, members of the committee, thank you for the opportunity to address you this afternoon, and for the good work you all do for the state of Kansas.

I am Nancy Jackson, Executive Director of the Climate & Energy Project (CEP) of The Land Institute. I testify today regarding Kansas House Bill 2949, the Kansas Energy Plan Act.

The issues you consider today are crucial and complex. Electricity has become central to our economy and way of life. We use more of it each year and our infrastructure for both generation and transmission is aging and was, in any case, designed for a different time. It is time to make decisions for a new century.

Today, we recognize that the way we produce and consume electricity affects our air, our water, our climate, and for all those reasons, our ability – and our childrens’ ability – to lead healthy, productive lives in Kansas over the years to come. At the same time, in an uncertain world, we face growing concerns about energy security and independence. For all these reasons and, in Kansas, to encourage rural economic development, interest in distributed generation and renewable resources is growing.

The bill before you today states early its purpose, to “develop a balanced energy approach, a plan which allows for continued development of all energy sources but is not driven by special interests or energy crises.” It provides “encouragement” for renewable energy, as well as for policies to increase transmission and promote market-driven solutions, and focuses on a “market-driven approach.” All of these are goals that CEP applauds.

The bulk of 2949, however, attends to base load generation – the sources of energy that utilities depend upon to meet the majority of their consistent demand, 24 hours a day, 7 days a week. The difficulty, in 2008, is that in a fluid global market, economics can be tricky to predict and the notion of base load itself is being reconsidered.

Just this week, for example, we learned that Peabody Coal shipped more coal to China in the first six weeks of this year than in all of 2007. Last week, Merrill Lynch announced its forecast that coal prices would jump by 200% this calendar year. As nuclear generation enjoys a likely renaissance, we can expect similar jumps in uranium. In a global marketplace with rapidly developing economies, competition for finite resources is and will continue to be stiff. Determining in 2008 what will be economic in 2028 is challenging to say the least.

Add to economic uncertainty the reconsideration of base load. As we speak, the Southwest Power Pool and the Midwest Independent System Operator are jointly conducting a study on the integration of large amounts of wind onto the grid and how that may affect historical understandings of base load and reliability. Just as we would not expect nuclear to conform to the profile of coal, or coal to natural gas, wind is a unique resource. It provides energy, but not “capacity” in the way we developed that term to describe other resources. If the country places a high priority on getting energy from wind – and indeed President Bush, the Department of Energy, and Governor Sebelius all agree that we should be getting 20% of our energy from wind by 2030 – then it makes sense to find new ways to talk about new resources.

All of this – not to mention pressing environmental concerns including air, water, and climate pollution and their costs, which are not mentioned in this bill – makes it difficult to project with any accuracy the most economic, reliable, and socially beneficial mix of generation for 2030 and beyond.

The suggested mix of generation reflected in Sec 5 (b)(3) – the bill’s directive to the corporation commission regarding base load analysis and planning – appears to double our nuclear generation (to 40%), reduce our coal generation (to 60%), and all but eliminate natural gas for base load by 2028. Which is to say: 2949 essentially directs that another nuclear plant be built in Kansas.

Passing such a law at this time seems premature. Another nuclear plant may ultimately prove to be a good option for Kansas, but surely that decision would result from careful consideration of a comprehensive energy plan for the state – one that considers base load, intermediate load, peaking power, the unique contributions of renewables, and the potential contribution of energy efficiency in addition to developing market forces, environmental concerns, and the desire and ability of Kansas utilities to participate.

In sum, CEP supports a comprehensive planning effort. In recognition of the complexity of the task, we trust that the committee will take a careful, considered approach and postpone determining fuel mix for future generation until more information is available.

— Nancy Jackson, Executive Director of the Climate and Energy Project