Provisions folded into a House bill emerged after the Legislature failed to repeal Kansas’ renewable portfolio standard adopted in 2009 to jump-start construction of a coal-fired utility plant in Kansas. That project in southwest Kansas stalled, which prompted lawmakers to seek retraction of the RPS. The influential wind lobby pushed back.
“What I tried to articulate in the campaign was that for anything to happen the parties had to come together,” Brownback said.
Potential implementation by the Legislature of an excise tax on alternative energy producers and the possibility the lifetime property tax exemption on existing wind farms could be undermined may have added urgency to negotiations.
“The wind industry, Brownback, legislative leadership and the fossil fools have brokered a deal to go for a 20 percent RPS, instead of a law-binding mandate, in exchange for no excise tax on renewables,” said Zack Pistora, a lobbyist with the Kansas Sierra Club, who isn’t part of negotiations. “This should be a double-down on renewable energy — not a double-back.”
In the state’s RPS era, electricity production from Kansas wind farms has grown from 1,000 megawatts in 2010 to 2,900 megawatts at present. By next year, wind production is expected to grow by 850 megawatts.
Under the deal announced by Brownback, the requirement Kansas utilities draw 20 percent of energy from renewable sources by 2020 would become voluntary rather than a mandate. The state’s utility companies are expected to reach that benchmark in about a year.
The bill would allow renewable energy facilities, primarily wind farms, to retain a lifetime exemption from payment of property taxes. New alternative energy units built after 2016 would be eligible for a 10-year property tax exemption. At the conclusion of that period, producers would be taxed at the 25 percent commercial rate instead of the 33 percent utility rate.
“This agreement is a good agreement,” said House Speaker Ray Merrick, R-Stilwell. “Good day for Kansas.”
Senate President Susan Wagle, a Wichita Republican, said the compromise served to maintain the state’s reputation as a state welcoming to progressive businesses and recognized diverse energy resources available in Kansas.
“A fair and stable tax structure can encourage these wind companies to increase their investments and go far beyond the state’s targeted goal,” said Sen. Marci Francisco, D-Lawrence.
The House Energy Committee approved the bill Monday within hours of the governor’s Statehouse news conference.
Kimberly Svaty, who lobbies on behalf of the Wind Power Coalition and is a participant in negotiations on the bill, said the deal would bring policy and investment stability to the Kansas energy market. The RPS served a valuable service by contributing to the formation of 12,000 jobs and $8 billion in new investment in Kansas, she said.
“RPS has been an economic engine for the state of Kansas since it was enacted,” she said. “The state has virtually achieved its RPS. It was time for us to consider the next iteration of marketplace stability. We have led the nation in wind energy development and, with this development, we look to regain that status.”
Mike O’Neal, chief executive officer of the Kansas Chamber of Commerce, said the compromise recognized the need to step away from a portfolio mandate.
“For us, it’s about affordability and it’s about a free-market system of delivering resources to our customers in a mandate-free environment,” he said.
The RPS emerged from the ashes of a harsh political feud between the administration of Democratic Gov. Kathleen Sebelius and Republicans in the House and Senate on the issuance of a permit necessary for construction of the Holcomb coal-fueled plant. Sebelius, pointing to coal’s contribution to global warming, denied the air-quality permit.
When Sebelius resigned in 2009, Gov. Mark Parkinson’s behind-the-scenes talks produced legislation that exchanged adoption of the RPS for issuance of the Holcomb permit. Sunflower Electric Power Corp., of Hays, hasn’t proceeded with the project. That fostered discussion among conservative Republicans about rolling back the renewable standard.
“You’ve had a lot of frothing about the policy issue” Brownback said.
He characterized expansion of wind farming in Kansas as “fabulous growth” that delivered “tremendous investment to the state of Kansas.