Kan. wind industry strikes deal with conservatives to ditch renewable standard

Source: Jeffrey Tomich, E&E reporter • Posted: Wednesday, May 6, 2015

After several years of fending off attacks by Americans for Prosperity and other conservative groups, Kansas’ wind industry brokered a deal with political opponents that would end the state’s renewable energy requirement in the hope of creating a more stable business climate.

Compromise legislation, announced by Gov. Sam Brownback (R) during a news conference yesterday afternoon with legislative and business leaders, would replace Kansas’ 20 percent renewable standard with a voluntary goal. It would also cap the current property tax abatement for new wind farms at 10 years.

Kansas in 2009 became the last of 30 states across the country to enact a renewable energy standard, a broader energy measure that also authorized the controversial Sunflower Electric Power Corp. coal-fired power station in Holcomb, Kan.

Since then, the state’s wind industry has seen robust growth from just over 1,000 megawatts to almost 3,000 MW. And projects representing another 1,870 MW of wind power are under construction or have signed power purchase agreements.

“It’s been fabulous growth; it’s been a tremendous investment in the state of Kansas,” Brownback said. “This agreement further solidifies and stabilizes the policy environment so that that investment can move forward.”

The measure follows years of political wrangling between the wind industry and clean energy advocates and the Charles and David Koch-backed Americans for Prosperity and the Kansas Chamber of Commerce, which made repeal of the RPS a legislative priority each of the past two years (EnergyWire, March 27).

This year, the biggest threat to renewable energy came from a bill that aimed to end the property tax exemption for wind farms and another that sought to impose an excise tax on renewable energy.

While neither bill emerged from committee during the regular session, the threat of unfavorable tax policy opened the door to negotiations between parties on either side.

Kimberly Svaty, the Wind Coalition’s policy director for Kansas, said the renewable standard has been an “economic engine” for the state that has delivered 12,000 jobs and $8 billion of investment. “But the state has virtually achieved its RPS standard,” she said. “It was time for us to consider the next iteration of marketplace stability.”

Svaty said the industry faced growing uncertainty with respect to tax policies.

“What the industry needs more than anything is a stable investment environment,” she said.

Some renewable energy supporters and environmental groups are unhappy with the wind industry’s willingness to bargain with political opponents, especially with the state facing compliance with U.S. EPA’s Clean Power Plan requirement to reduce greenhouse gas emissions from the power sector.

Dorothy Barnett of the Climate and Energy Project said the voluntary goal agreed to in the bill is meaningless because Kansas already gets almost 20 percent of its energy from renewable resources.

According to a report by the Kansas Corporation Commission, the state’s three major utilities are on track to meet the 20 percent requirement, and two of them will do so at least three years early.

“If you’re going to bargain with the RPS, at least have it be something that has the appearance of an aspirational goal,” she said.

The same was true a year ago when the wind industry vigorously defended itself against attacks by conservative critics. At the time, parties on both sides of the issue agreed that leaving the RPS in place was a largely symbolic representation of the state’s support for the wind energy.

“This has been a direct, repeated attack on renewable energy by Americans for Prosperity, the Chamber of Commerce and Koch,” Barnett said. “The only thing that was going to satisfy them was getting the RPS off the books.”

An export industry

Legislative leaders from the state House and Senate joined Brownback at yesterday’s news conference and hailed the agreement as a measure that aligns the interests of legislators and the wind industry.

“I think the compromise advances our reputation as a pro-business state and that we support all forms of energy,” said Kansas Senate President Susan Wagle, a Wichita Republican.

Mike O’Neal, CEO of the Kansas Chamber, said the business group supports wind power development and renewables as part of a diverse energy mix for the state. But the group was ideologically opposed to the renewable requirement.

“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.

Brownback acknowledged that there’s no guarantee that legislators won’t again seek to change the tax treatment for renewables. But for now, he said, it provides certainty sought by wind developers.

“That’s the thing that everybody is trying to get to, a stable policy environment,” he said.

With Kansas near the 20 percent threshold already, Brownback said, the state needs to view wind as an export industry.

“Our big piece that we need going forward is more transmission lines,” he said. “The power lines that are built to take wind energy out of state are already full.”