Tax Breaks & Subsidies and Kansas
According to the American Wind Energy Association (AWEA), Kansas is leading the U.S. in new wind farm installations this year. By the end of the year, eight new utility-scale wind projects will come online - representing approximately $3 billion in new investment - and the state will have more than doubled its installed wind power by adding 1.489 GW of new wind power capacity.
"There's no money tree in Washington, D.C.," responded Huelskamp, opposed to renewing the subsidy set to expire at the end of the year.
They pressed him about his support for other incentives benefitting agriculture and oil and gas. He criticized the comparison and defended his stand. ...Reno County resident Wayne Johnson told Huelskamp it was refreshing that Huelskamp was "holding firm."
It's still possible that a wind subsidy might work its way out of the Senate yet this year, but the U.S. House of Representatives is another matter.
The House includes a large contingent of staunch conservative budget hawks and opponents of alternative energy subsidies, including U.S. Rep. Mike Pompeo, R-Wichita. He said the House is highly unlikely to pass any bill with alternative energy subsidies.
On wind, he said he opposes a measure called the Renewable Energy Standard that requires utilities all over the country to use a certain percentage of wind-generated electricity, although he has supported other wind tax credits.
Renewing the production tax credit for wind farms in 2012 will be difficult, he said.
Wind turbines in Kansas could be taxed by the state and local governments under legislation supported Friday by a group of western Kansas officials.
A bill before the House Taxation Committee would eliminate the lifetime property tax exemption granted in 1998 to renewable energy resources and technologies.
The Kansas Legislative Policy Group, a coalition of 30 county commissions in western Kansas, offered the sole testimony in support of the change Friday.
Gov. Kathleen Sebelius spent a day this week in Houston, the city of big oil, to promote another energy source -- big wind.
In her speech Monday to the annual convention of the American Wind Energy Association, Sebelius called on the federal government to renew its production tax credit for wind energy due to expire at year's end.
She urged Congress: "Make it clear to investors that this incentive will last for several years."
The governor's message echoes a concern of wind developers, who complain they can't make plans to build in places such as Kansas without a multi-year tax credit in place to boost their emerging industry.
The U.S. Senate recently approved a single-year extension, but the bill remains pending in the House.
A decision by the Kansas Corporation Commission has led Westar Energy, Inc. to suspend plans to develop 200 MW of wind power by the end of 2010. ...The company said the order also indicated that in the future wind generation could be subject to "undefined operating standards" and "potential financial penalties" that have not been imposed on other forms of generation. ...In its order, the commission said it concluded the circumstances do not justify allocating to ratepayers the cost of an additional 1 percent return on investment in light of the uncertainties inherent in wind generation and the narrow margins as to whether purchased power agreements or ownership is more costly.
The commission also said an incentive mechanism to maximize wind energy output is not necessary at this time. It plans to revisit the issue in two years.
State regulators are saying Westar Energy Inc.'s plans to invest in wind power are prudent but aren't allowing the utility to increase its profits.
The Kansas Corporation Commission's decision created uncertainty about Westar's plans to invest in 295 megawatts of generating capacity from wind farms in three counties, enough to power 88,000 homes. ...Construction costs and the fact that wind doesn't blow consistently means that electricity from wind turbines more expensive per kilowatt hour in the short term than power from coal-fired plants.
But commission spokeswoman Rosemary Foreman said Westar shareholders' risk was lessened because regulators will permit the utility to recover its investments in wind farms through its rates.
"The commission just didn't think it justified, the ratepayers paying an additional cost," she said. "The risk to the company is minimized."
Westar is seeking the rate approval to recover $282 million for ownership of turbines at two proposed wind farms and for costs in purchasing energy from a third farm. The 300 megawatts of electricity would come from the Central Plains Wind Farm in Wichita County; Meridian Way Wind Farm in Cloud County and Flat Ridge Wind Farm in Barber County. ...Westar expects energy demand to continue growing among customers and while new wind energy can put off purchase of new "baseload" or constant power sources, for now, the utility expects it will need to build a new power plant between 2016 and 2018. ...Moore told commissioners Westar would walk away from the wind projects if they weren't allowed to earn at least a small profit from them.
Kansas can forget about wind power if Westar Energy doesn't get the chance to earn extra profit from it, the company's chief executive testified Monday.
Westar chief executive Bill Moore also said Westar would scrap its wind energy plans if the company isn't allowed to build its own wind plants, or if regulators approve sanctions that would be triggered if wind power performs below expectations.
"If the direction we're headed is not what the commission wants us to do, we won't go forward," Moore said.
Monday was day one of a court-like hearing on how Westar will recover costs of adding about 300 megawatts of wind power to its energy system, which serves 674,000 Kansas customers.
A program aided by the U.S. Department of Energy seeks to place small wind turbines at several rural Kansas high schools in the next three years.
Wind for Schools is a national outreach effort of the National Renewable Energy Laboratory in Colorado, where organizers hope to familiarize rural America with a cheap local source of power.
The program will help selected schools construct a 1.8-megawatt wind generator on a 60-foot tower. In addition, they'll provide educational support for all school levels to create lessons based on the turbine.
Wind farms in Kansas, Nebraska and California will play a role in Colorado Springs Utilities’ compliance with a voter-approved mandate on renewable energy.
But homes and businesses in Colorado Springs won’t be getting electricity produced by harnessing wind in those places. Instead, renewable energy credits will be logged into Colorado Springs Utilities’ books.
Whenever energy prices rise, the government promises to subsidize oil alternatives," said Jerry Taylor, an energy expert with the Cato Institute, a Washington, D.C.-based think tank that opposes government intervention in economies.
"It's flushing money down the toilet."
Wind farm operators do not pay property taxes under a state incentive aimed at fostering development of renewable energy. The money is meant as a gift, in lieu of the taxes KCP&L otherwise would have to pay.
The bill provides a 10 percent income tax credit, accelerated depreciation and property tax relief to energy companies expanding or locating new facilities in Kansas on projects up to $500 million. The credit moves to 5 percent if the project exceeds that cost.
This means, said Anderson, that they are seeking to impose a requirement that all companies purchase a certain amount of their energy from this renewable source.
“The problem is that no one wants to buy the energy they are producing because of the high cost involved,” said Anderson. “However, they are pushing hard and I don't know at this time whether they will be successful or not.”
Commissioner Duane Patrick brought up the “elephant in the room” in regard to wind farms in Kansas and the payment in lieu of taxes issue.
Missouri Commissioner of Securities David Cosgrove has issued a cease and desist order against Krystal Planet Corp. and its executives for allegedly selling unregistered securities and deceiving investors.