Renewable energy law could cost consumers

Fulfilling one of the final goals of former Gov. Kathleen Sebelius, the Kansas Corporation Commission has approved regulations directing utilities to get 15 percent of their electric power from renewable sources by 2016 - and 20 percent by 2020.

But the head of the state's consumer advocate agency criticized the standards as arbitrary and said the action could cost ratepayers hundreds of millions of dollars in increased electric rates.

Under the new regulations, utilities that fail to meet the new standards could be fined twice the cost of buying renewable energy credits that they would have needed to comply with the mandate.

Neither the regulations approved by the commission - nor the law underlying them - prohibit utilities from attempting to pass the fines along to customers in the form of higher rates.

But commission spokeswoman Cara Sloan-Ramos said the staff would fight to keep that from happening.

"Historically, fines have not been allowed to be recovered" from ratepayers, she said.

The new KCC regulations were published last week and take effect Nov. 19, according to agency documents. The regulations implement laws passed by the Legislature in 2009.

But the goal and timetable date back to the January 2007 State of the State address by then-Gov. Sebelius.

Sebelius outlined the 20 percent by 2020 mark and announced that she had appointed then Lt. Gov. Mark Parkinson to head up a commission to get it done.

After Parkinson took over as governor, the Legislature passed the renewable energy standard as part of deal to allow a coal-fired power plant near the town of Holcomb in western Kansas.

But nobody ever clearly explained why 2020 was the best time - in technical or economic terms - to implement the 20 percent renewable standard, said David Springe, chief counsel for the Citizens' Utility Ratepayer Board, the state agency representing small-scale utility customers.

He said none of the state's major utilities need new generating capacity now.

Meeting the new standards could saddle consumers with hundreds of millions in costs of building wind turbines and the transmission lines to carry the power to market.

It's not that CURB opposes wind power, he said.

"We think it's a good idea, but not to do it in such an arbitrary manner," he said. "In this type of economic climate, it doesn't make any sense to make utilities spend hundreds of millions of dollars to bring wind. We (ratepayers) don't have several hundred million dollars to spend on this at the moment."

The chairman of the state Senate Utilities Committee, Pat Apple, R-Louisburg, acknowledged that the plan that passed the Legislature may not have been the best choice.

Apple said he would have preferred a law with "a little more cushion time" to integrate wind into the power system.

But, he said, the current law "was the compromise that was struck in the Legislature" to get the Holcomb plant approved.

The plant had been effectively blocked by Sebelius and lawmakers allied with her, who argued that Kansas would get air pollution while most of the power would be shipped out of state.

Apple said he thinks the wind generators being built - though costly now - will ultimately be seen as beneficial.

"We're getting the benefits of generation that was built in the '60s, '70s and '80s," he said. "A lot of those costs have been absorbed and paid for.

"We're kind of at that point where we're going to enter a new construction cycle.''