Climate and energy

Reprinted in full from Hutch News, originally published August 30, 2008.

Pursuit of coal derailing wind development
By Dan Nagengast

Much has been made of the “chilling effect” on Kansas commerce because of Kansas Health and Environment Secretary Rod Bremby’s denial of a permit for Sunflower Electric Cooperative’s 1400-megawatt coal plants in southwest Kansas.

Indeed, Amy Blakenbiller, president and CEO of the Kansas Chamber of Commerce, has used precisely those words to describe what the decision has done to the business and manufacturing community.

This has been echoed by energy committee leadership in the Kansas Legislature, many of whom hail from western Kansas.

Now, that same leadership seems to be making preparations for the next legislative session as a redux of the last. Rep. Melvin Neufeld appointed four pro-coal legislators as members of a Joint Committee on Energy and Environmental Policy.

Though the rest of the world is making accommodation to a sea change in energy policy, Kansas leaders seemed prepared to brazen onward with a policy that is being left behind.

Climate change and energy shortfalls affect us all, clearly posing a threat to business as usual. But the issue also offers an incredible economic development opportunity for our state, and for rural and western Kansas in particular. Focusing solely on coal-plant development not only pretends ignorance of the threat but also equally ignores the opportunity.

The threat

While western Kansas legislators claim their energy rates are too high, the region, by no means, has the highest energy costs in the state. Still, it is claimed that unless the plants are built, costs will rise.

Well yes, and if they are built, costs may rise even more. New coal generation is no longer cheap, with many, many plants across the country being cancelled because of cost.

According to Spark, a publication of Public Utilities fortnightly magazine, power plant and fuel costs have risen 300 percent recently. Not that long ago coal plants could be capitalized for $800 to $1,000 per kilowatt. New plant capital costs are now coming in between $2,300 and $3,700 per kilowatt.

At the high end, this puts the cost of the Holcomb plants over $5 billion. Combined with a 300 percent increase in fuel costs, Holcomb energy will not be a cheap power supply for western Kansas.

And of course, this assumes that Kansas will somehow be magically exempt from the cost to all new plants to come into compliance with carbon sequestration requirements. No other utility or state in the country is operating on such an assumption, and ignoring it in western Kansas won’t make it go away. Then there is the question of whether Colorado utilities will even purchase energy from the plants. Much was made of the plants as “exporters” of energy to other states, with power lines heading west to the Front Range.

First of all, these “exports” would be based on an import – mountain state coal. But there is an even shakier assumption embedded in this scenario. My own state representative, Ann Mah, was curious about whether this energy was really needed by population growth areas like the Front Range. So she called the Colorado governor’s energy director who informed her that the state supported Secretary Bremby’s veto of the Holcomb permits and preferred not to purchase energy from the proposed Holcomb plants.

Kansas is clearly failing to respond to the threats of high energy costs and global warming.

The opportunity

What about the fabulous opportunity for the Kansas economy that our abundant wind resource represents? Our state is pursuing that, right?

The Kansas wind resource is ranked third in the country. States with lesser resources and better policies, such as Iowa and Minnesota, drool at what our wind resource would mean for their states.

They have enacted policies that get more wind into the grid; support schools, farmers’ cooperatives and landowner’s projects; and actively research ways to take advantage of wind beyond what can be used by the grid. And their rural economy is prospering because of this, as it should.

The rest of the world recognizes our resource, even if some of our statewide leaders don’t. The U. S. Department of Energy plans for Kansas to supply at least 7,000 megawatts of wind to the grid, on line in the next 20 years or so.

There is activity akin to a gold rush going on in western Kansas. There are developers and lease hunters scouring every county there, but also in Oklahoma, New Mexico and the Texas Panhandle.

There is an amazing amount of pressure on farmers and landowners, county commissioners and public officials, economic development professionals and other service providers as they try to deal with this.

They could use some help and some policy direction. But we have almost no policies that would encourage development or require utilities to begin accepting large amounts of wind energy. The momentum here could stall out or move to those clearly more hospitable states.

Kansas stands alone among major wind resource states in that respect, with no renewable (energy) portfolio standard and no net metering law.

Meanwhile, the Kansas Chamber of Commerce says it will be supporting “pro- business lawmakers” during the next election cycle.

“Pro-business” apparently means legislators who have proven they are singularly pro-fossil fuel energy, despite all the business and societal indicators against it.

How our state Chamber can ignore Kansas’ most significant economic opportunity and attraction for foreign investment in a lifetime is incomprehensible.

There are other opportunities being lost. Turbine and component manufacturers are locating in surrounding states with better policies, though not necessarily better wind. Taxes, on an entirely new, highly profitable enterprise, could be structured to bring in more tax revenue to local schools and county government.

Policies could be enacted that encourage more local ownership of turbines, bringing a six- to 10-fold greater impact on regional economies than the same turbines if owned by investors in Spain or Germany. Siting standards could be developed that would ease the conflict between landowning neighbors and not put such a burden on county commissioners.

Finally, the state could assist with financing local ownership through credits, bond funds or other creative financing. Our lack of policies like this send developers, and large federal granting opportunities that buy down the cost of turbines, to other states that want the business. Our tax dollars leave to support economic development elsewhere, but our policies ensure that none of it comes back.

Wind energy development could benefit virtually every county in the western three-quarters of the state, with new revenues, a new tax base and new jobs. It could provide a reason for young people to stick around. It could revitalize our small places. And what’s more, it could make Kansas a hero of the new green economy.

I agree, it is time to quit chilling business in Kansas, but let’s look at which way the finger should be pointing.

Dan Nagengast is executive director of the Kansas Rural Center.