Library from Kansas
Westar Energy said today it was disappointed in the Kansas Corporation Commission's order on the company's wind energy expansion because the KCC denied an additional 1 percent rate of return and left uncertainties about future regulatory requirements. ...The order, released Thursday by the KCC, also indicated future wind generation could be subject to undefined operating standards and potential financial penalties that have not been imposed on other forms of generation. ..."We are concerned about the uncertainty introduced by the commission's decision, particularly the indication that it may impose harsher operating standards for this new wind generation than it has imposed on other types of generation in Kansas," added Moore. "We don't see the order encouraging the further development of wind energy in Kansas."
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."
[T]he Kansas Corporation Commission issued its order on Westar Energy, Inc.'s (NYSE:WR - News) request for the commission to determine the rate treatment for its proposed investment in wind energy. While finding the utility's proposal to invest in wind energy prudent, the order declined to approve Westar's request for an incentive rate of return allowed by Kansas law. ..."We are concerned that the KCC's decision introduces uncertainty as to how wind investments might be regulated in the future, increasing their risk and inhibiting such development. ..."
Whether Kansans will get electricity from wind power was up in the air late Thursday after state regulators ruled that Westar Energy won't be able to make an extra profit for developing wind farms. The Kansas Corporation Commission rejected a key part of a proposal by Westar that would have added 1 percent to the company's rate of return for developing wind energy. Westar has said that it wanted the premium to compensate for the increased risk of developing wind power compared to fuels such as coal and natural gas.
...the Smoky Hills wind farm, which was slated this week to start delivering electricity spun from the prairie wind, likely will not deliver any electricity until January, a delay caused by the severe winter storm that set in more than a week ago. "Needless to say, the ice storm and snow last week really threw everything to a grinding halt," said Frank Constanza, senior vice president of corporate development at TradeWind Energy, which is developing the 250 megawatt wind farm in Lincoln County. "We're at the mercy of the elements." ...In early November, the huge crane that erects the towers was toppled by high winds.
Wind generators have been the Rodney Dangerfields of the electricity market. They're unreliable, traditional utilities say. And expensive. So when Rob Gramlich, policy director of the American Wind Energy Association, got up to address the fifth Kansas Electric Transmission Summit on Friday, he seemed to be suppressing a smile. A previous presenter had just dropped a couple pretty stunning figures: about 13,000 megawatts of wind projects have been queued up for study, and the total could reach 40,000 to 60,000 megawatts in the near future. To put that in perspective: total peak demand in the heat of summer is only a little over 40,000 megawatts. ...A huge stumbling block for wind development is that the cost of connecting the wind farm to the electric grid can fall to the local utility. Most of the wind potential in Kansas is in rural areas served by small electric cooperatives, who therefore could be forced to underwrite connection to the network even though they may not use any of the electricity.
Some of the state's top utility lawyers battled Wednesday over whether Westar Energy should get a chance to earn extra profit for adding wind power to the electric system that serves 674,000 customers. At issue is a law-- passed during the energy crisis of the 1970s -- to allow state regulators to boost the profit potential for utilities that develop alternative energy and conservation programs.
Let's face it: Most homeowners don't buy wind generators or solar energy systems simply for environmental reasons. They make the investments because they're banking on a payoff in the form of lower energy costs. Westar Energy is no different in wanting a bang for its green-energy bucks, which is why it's seeking a rate increase to support an $830 million wind energy project. But just how much of a payoff should Westar receive? And at what risk? ...To some extent, it's reasonable to place the cost of wind power on the shoulders of ratepayers. After all, wind could provide Kansans with an abundant, environmentally friendly energy source to offset the cost of fossil fuels. Westar and its stockholders should be given the chance to obtain a fair return on the company's investment. At the same time, though, the company bears a responsibility for keeping cost increases to a minimum for its customers.
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.
The cancellation of a proposed coal-powered generating plant in Holcomb might delay the construction of some new transmission lines, but demand for wind power is growing so fast that, sooner or later, the lines will be built, a state board was told Monday. ...The cancellation of a proposed coal-powered generating plant in Holcomb might delay the construction of some new transmission lines, but demand for wind power is growing so fast that, sooner or later, the lines will be built, a state board was told Monday.
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.
Sunflower Wind is something of a startup company that hopes to build a wind farm in Decatur County, as well as constructing methane and hydrogen generators on an experimental basis. The company has targeted Oberlin as critical to its operations and has asked for the city to sign a contract for delivery of power. ...What has troubled Oberlin about the Sunflower Wind contract has been its insistence of a right of first refusal clause in the contract. In the latest revision, it's no longer called that. But Sunflower Wind still would have the opportunity to match prices if anyone offers a lower price. "They have taken it out, in those words," Shike said. ...Rather than calling it a right of first refusal, it's now called "reverse bidding process."
The cancellation of a proposed coal-powered generating plant in Holcomb might delay the construction of some of new transmission lines, but demand for wind power is growing so fast that sooner or later the lines will be built, a state board was told Monday. And that skyrocketing demand for wind power is drawing calls for changes in the way the cost of new transmission is allocated.
A consumer advocate who had questioned whether Gov. Kathleen Sebelius had improperly influenced two state utility regulators in their decisions about energy policy says he is satisfied with the regulators' responses. Kansas Corporation Commission members Michael Moffet and Thomas Wright filed affirmations late Thursday afternoon stating they have had no conversations with Topeka-based Westar Energy Inc. or Sebelius regarding energy policy or a pending rate increase hearing. Westar is asking regulators to give preliminary approval to raise rates to recover the costs of developing wind turbines, and Sebelius has advocated for alternative energy.
... Westar's proposal [is] to add 300 megawatts of wind energy -- about enough to power 90,000 homes -- at a cost of $830 million over the next 20 years. The Kansas Corporation Commission is expected to rule by year's end on how to allow Westar to recover the cost. If approved, Westar's plan would add about $2.25 a month to the average customer's bill. ..."Something tells me there are going to be cost overruns and the capacity they're expecting won't be there and we'll get stuck with the bill,"
With hearings on a wind power case set to begin Monday in front of the Kansas Corporation Commission, a complication is developing. One of the three commissioners already has recused himself from the case, and now a watchdog group wants the other two recused, suggesting they may have been improperly influenced by Gov. Kathleen Sebelius. The governor's office says she did no such thing but has no idea how the matter would proceed if there was nobody to hear it. ...But even if Moffet and/or Wright wished to recuse themselves at this point, they could not, according to the office of Attorney General Paul Morrison. Citing a legal principle known as the Rule of Necessity in Administrative Law, the office said that commissioner who may be subject to disqualification for "bias, prejudice or prejudgment of the issues" are not disqualified if their absence prevents a decision from being made.
Environmentalists and ranchers on Monday praised Westar Energy's plan to invest in wind energy in Kansas. Council Grove rancher Rose Bacon said Westar Energy acted responsibly in locating its wind farms outside the Flint Hills. Bacon was one of eight people who spoke at a public hearing Monday at the Kansas Corporation Commission regarding Westar Energy's plans to develop wind power in Kansas. The KCC is expected to decide by year's end on rate-making principles for wind farms. Westar plans to locate its three wind farms at Meridian Way Wind Farm in Cloud County in north-central Kansas; Flat Ridge Wind Farm in Barber County west of Wichita in south-central Kansas; and Central Plains Wind Farm in Wichita County in extreme western Kansas.
A state consumer agency is demanding to know whether Gov. Kathleen Sebelius and her lieutenant governor have tried to influence state regulators who are about to decide how much consumers will have to pay for wind power from Westar Energy. The concern stems from a once-confidential memo written by the former chief executive of Westar Energy indicating that Sebelius and Lt. Gov. Mark Parkinson influenced utilities to pursue large-scale wind power by promising they would be "fully compensated" for any added costs of building wind plants.
Lawrence lawmakers expect the Legislature will spend a lot of time fighting about two rejected coal-fired electric plants in western Kansas. ...Regardless of their views, they all agreed that rejection of the plants must be followed with a debate on how Kansas will meet its future energy needs, and what can be done to help the western Kansas economy should Bremby's decision stand. "Western Kansas needs more electricity," Sloan said. "So if you are not going to allow that plant to be built, how will you meet their legitimate needs?"
Its giant windmills remain still, but Smoky Hills Wind Farm already is generating economic activity in north-central Kansas. Between 200 and 250 workers are constructing the facility -- building roads, erecting turbines and assembling electrical systems that will collect and distribute the 100 megawatts of power that will be generated -- and about two-thirds of them have been hired locally.