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Archive for Monday, December 3, 2007

Changes may blow out Westar’s wind proposal

Board says development might not be in best interest of ratepayers

December 3, 2007

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— Westar Energy's request for increased rates to develop the state's largest wind energy program could have a long-term impact on Kansans.

"This is a big case, and we're fighting over a lot of things," said David Springe, consumer counsel for the Citizens' Utility Ratepayer Board.

Westar wants a decision from the Kansas Corporation Commission quickly. Rate cases generally take at least six months, but this one has been placed on a three-month fast-track.

Westar, the state's largest utility, says it needs a quick turnaround because wind energy is hot.

"To put it bluntly, it is a seller's market. If we cannot commit within the time frame we have outlined, the developers will likely take their business elsewhere," said William Moore, Westar president and chief executive officer.

The hearing in the case starts today. KCC is scheduled to make a decision by the end of the month.

Westar's proposal

Westar wants to add 295 megawatts of wind-generated energy, which would be enough electricity to power a city the size of Lawrence. About half of the power would be built and owned by Westar and the other half would be bought through power purchase agreements. If enacted, the proposal would nearly double current wind generation in Kansas, which is among the top three states when it comes to potential wind power.

To embark on this plan, Westar wants some upfront assurances from KCC. It wants to be able to include the $282 million to build wind power in the company's base for rates and it wants to be able to recover the costs of the purchased power. It also wants a 1 percent rate of return bonus for its troubles.

If it gets all this, Westar says it will obtain another 200 megawatts of wind generation by the end of 2010.

Average residential costs will increase $2 to $2.50 per month under the proposal, Westar says. CURB's Springe has argued the increase could be closer to $4 per month.

Moore says wind energy is justified because it may protect consumers in the long run from volatile fluctuations in other energy sources, such as coal and natural gas.

"It is entirely possible the net result of adding wind generation will result in a rate benefit over the life of these contracts and investments," Moore said in testimony to KCC.

In dispute

CURB, the agency that represents ratepayers, doesn't argue that Kansas needs wind energy.

But development of wind must be in the ratepayers' interest, said Andrea Crane, an expert consultant hired by CURB.

"It would be irresponsible for regulatory commissions to promote renewable energy at any price," Crane said.

Crane's analysis says Westar-owned wind energy will cost ratepayers 14 percent more than if the company purchased its wind energy from other companies on the wholesale market. Wind purchases provide rate stability because the rates are fixed for the term of the agreements, while company-owned assets - the turbines and their operation - increase the rate base and risk to ratepayers, she said.

Crane also opposes the 1-percent bonus for Westar, especially if KCC gives Westar the OK to build wind farms.

She argues KCC shouldn't provide incentives for Westar to build because this bonus will benefit company stockholders while ratepayers are exposed to added risk.

Westar's Moore disagrees with Crane, although he concedes it isn't known whether built or bought wind will cost more.

"The fact is that we will not know which method for acquiring wind energy is less expensive until we have many years of experience with these resources," he said.

But if KCC agrees with CURB, Westar will reduce its project, and wind development by Kansas utilities would be dealt a devastating blow, Moore said.

Both Westar and CURB, however, do agree that KCC should consider having Westar offer a "green tariff" so that those customers who are willing to pay for additional amounts of wind energy can do so.

Controversy

The rate case also has generated controversy.

Last month, one member of the three-member KCC disqualified himself from the case, and CURB asked the other two commissioners to do the same.

This happened after CURB found an internal Westar memo that stated Gov. Kathleen Sebelius told utility executives that their companies would be "fully compensated" when seeking to recover costs for building more wind energy.

Sebelius appointed all three KCC commissioners. Commissioner Joseph Harkins has recused himself from the Westar case because he said he wanted to avoid the appearance of impropriety. Before being placed on KCC in June, Harkins served as Sebelius' energy adviser.

But Commissioners Thomas Wright and Michael Moffet refused to disqualify themselves, saying they never have had any discussions with Sebelius on the subject of setting rates.

Wright noted that KCC "has clearly indicated its intent to further alternative energy and energy efficiency programs in prior dockets."

Comments

LogicMan 7 years ago

"Both Westar and CURB, however, do agree that KCC should consider having Westar offer a "green tariff" so that those customers who are willing to pay for additional amounts of wind energy can do so."

For now, this makes the most sense. As the need increases, more wind farm developers and equipment providers will naturally enter the market. Collector and long distance transmission lines and step-up stations are needed, however.

lounger 7 years ago

Wind HAS to happen- no matter what! For kansans to have this at our feet and do nothing is fool's play. We will be a progressive, clean energy producer if this is pushed through. No pollution is always smarter for the present and especially the future.

just_another_bozo_on_this_bus 7 years ago

The currently externalized costs of burning fossil fuels (for their contribution to global warming and other forms of pollution) need to be fully included before wind generation will become truly cost competitive.

compmd 7 years ago

I still can't believe that Westar honestly expects to have customers fund its little experiment in wind power. It isn't necessary or critical, so they can pay for it instead of making us accept the risk of them screwing up.

dirkleisure 7 years ago

It isn't necessary? I thought we were short on power?

This isn't an experiment in wind power. This is adding additional power to the grid. The alternative is construction of a new coal or gas fired plant. Guess who picks up the tab for that?

The real risks come from those power companies that are insistent on constructing gargantuan new coal fired dinosaurs, the equivalent of a television manufacturer only building TVs with rabbit ears. Remember, even a $3.5 billion "investment" has to be paid for by rate payers. It isn't charity.

compmd 7 years ago

I should have clarified earlier, although LogicMan seems to have covered what I was trying to say. I think we really do need renewable energy, wind energy in particular. However, Westar is a corporation, and as such they can risk their own capital, not find ways to risk our funds for their pet project.

booze_buds_03 7 years ago

I think wind power is necessary, I just dont think the customers should subsidize it. How about asking your investors for the money. Or maybe every customers that subsidizes your wind farm project also gets a share of company profits and stock in the company.

Richard Heckler 7 years ago

Cut back on energy use every way possible no matter how power is generated. Turn off those energy efficient light bulbs.

ralphralph 7 years ago

Beware of things that are 'hot'. If it's a good idea in 3 months, it's still a good idea in 6 months. Plus, it might take that long to follow the money.

average 7 years ago

A 'green tariff' would be a start. Real, honest-to-god competition... so I am not funding Westar's executive perks, greenwashing, lobbying, and corruption would be much better.

feeble 7 years ago

Beware of things that are 'hot'. If it's a good idea in 3 months, it's still a good idea in 6 months. ==================

I recall seeing my first wind farm back in 1983, is 288 months a long enough wait?

creamygnome 7 years ago

Wind Energy is more environmentally friendly...so the government oughta step in and provide a small tax break to those cizitens purchasing saver forms of energy. Of course, the government should do a lot of things to promote the environment...but whatever.

LogicMan 7 years ago

"It isn't necessary? I thought we were short on power?"

Yes and no. What's needed is power when the customer demands it. Westar is already building a new plant somewhere near Emporia that is gas-fired.

When the wind blows and when customers want the most power are often not at the same instant. So conventional, highly reliable plants must be built (and paid for). Wind and solar-electric plants can only reduce the fuel used by the conventional plants ... until the day that we are willing to accept intermittently-available power. That day is a long way off, and likely beyond our lifetimes (hopefully) for us, but is already common in some parts of the world.

Mkh 7 years ago

Wind power is essential to the future of Kansas and it should be funded by the Citizens, Not the Government!

Sigmund 7 years ago

Let CURB and David Springe do their job. I am pleased about Westars interest in pursuing wind power, but we need an complete outside audit of their plans and costs. Only then can we begin to discuss the amount of the rate increase to consumers. These pressure tactics of "you must make a decision today" doesn't pass the laugh nor the smell test. If it is a good deal today it will still be a good deal in 6 months after CURB studies it.

Joe Hyde 7 years ago

Second what ralphralph said. If wind power is so hot right now, as Westar claims, won't it still be quite warm to the touch six months hence? Let this idea go through the same KCC review process that is involved when studying other rate increase proposals.

After all, wind power isn't exactly a revolutionary new technology whose details fell into Westar's lap just last week.

Jim Fisher 7 years ago

Maybe someone can explain the grid to me. If I purchase wind electricity, how will my electric meter know how that electricity is generated? Or will I need to purchace a different meter that can tell the difference? What I think we are looking at here is the jousting of Players. Players are people who want to run a business, make money, etc., but they want someone else (us) to provide the money for them to do it. Recent examples in the Lawrence area are the folks who want to build a hotel on Mt. Oread, and the ones who want to develop an industrial park. They have some property or some venture capital, but want the public to pay for the extension of services to them, or to upgrade existing services. So they can tend to their business.

If you or me wanted to start a business, or to grow an existing one, it would be up to us to finance it, and run it keep a clientele (because everything is about sales, right?). Westar already has its customers in place, so the risk for failure on this investment is minimized; the rate of return is what the company's leaders are trying to maximize, so they can pay it off quicker. What they are trying to do is increase the rate of return by upping the rates.

This is also new territory for the technology. Nobody really knows how wind farms on this scale are really gonna operate, its never been done.

I hav sone big ideas for energy conservation and the like, I just wish I was a Player.

average 7 years ago

fishcat -

It's impossible to tell one electron from another. To a small degree, your computer is powered by hydro from northern Manitoba as well as Wolf Creek nuclear.

If you buy "wind power", and you use 351 kWh in a month, you'd pay a company who promised to deliver 351 kWh of wind-delivered energy to the grid in that month (plus some to the company who maintains your local wiring).

LogicMan 7 years ago

"Maybe someone can explain the grid to me. If I purchase wind electricity, how will my electric meter know how that electricity is generated?"

It doesn't. If you are here in Lawrence, most of your electrons are coming from the Lawrence Energy Center, when is it operating. And some from the nuclear plant near Topeka, etc.

just_another_bozo_on_this_bus 7 years ago

"What's needed is power when the customer demands it. Westar is already building a new plant somewhere near Emporia that is gas-fired."

I believe they have cancelled the gas-fired plant, haven't they?

Ken Lassman 7 years ago

"This is also new territory for the technology. Nobody really knows how wind farms on this scale are really gonna operate, its never been done."


It's been done quite a bit, actually, and I suspect that Westar is looking across the Oklahoma border and thinking that they'd better get in gear, as the article below points out. CURB should look at the lifespan costs of coal in their bottom line expenses, too, since carbon taxes may be in our future. If this is done, then wind is a no-brainer. http://www.renewableenergyaccess.com/rea/news/story?id=50532

November 12, 2007 Oklahoma Utility Wants to Quadruple Wind Power Production Oklahoma City, Oklahoma [RenewableEnergyAccess.com] The Oklahoma utility OGE Energy Corp. recently detailed plans to quadruple the wind power production of it's subsidiary OG&E Electric Services, bringing the company's wind capacity from 170 megawatts (MW) to around 770 MW. OG&E President and CEO Pete Delaney said that implementation of the company's plans should give more OG&E customers the choice of being up to 100 percent "green power" users in a few years.

"The significant amount of wind in western Oklahoma is a largely untapped resource that is in increasing demand in Oklahoma and across the nation," said Delaney. "We have been working on plans for some time now to significantly increase OG&E's wind power production over the next four years."

Delaney said the investment in wind energy development could move Oklahoma from being sixth in the nation to as high as third in wind power production behind Texas and California. In addition to OG&E, there are many other developers interested in western Oklahoma wind projects.

Delaney also described the company's aim to begin building a key stretch of transmission power line from Oklahoma City to Woodward, eventually extending to Guymon. Such a high-capacity line would be necessary for OG&E and others to deliver wind-generated power from western and northwestern Oklahoma to the rest of the state and beyond.

just_another_bozo_on_this_bus 7 years ago

Everyone's electric bills are going up, its_getting_warmer-- the age of cheap energy is over.

The immediate shut-down of the Jeffrey (sp?) and Lawrence plants isn't going to happen-- they are for the short term grandfathered in, but I agree that they should be required to meet much stricter requirements very soon. That should be part of a nationwide review of our use of coal-fired plants (which would be, in turn, part of a comprehensive review our entire energy policy) that will lead to the shutting down of older plants, perhaps one or even both of those plants.

Jim Fisher 7 years ago

I apologize for my naievete and lack of understanding of distribution of commercial electricity. What I think I was trying to say, is if we have all this wind-generated electrical infrastructure, is it based on some type of average production rate, or the built capacity? These are built over a large area, and there may be some areal variations in wind withinn one farm, as well as production variations between wind farms- the wind is blowing harder here than over there. How does the power get delivered to where it needs to go, and what happens when we as a community, state or whatever needs more? Do coal and gas-fired plants "idle" and then be brought online as needed, or must they be constantly producing power? Do we build wind farms and then phase out the pollutors (fossil-fueled plants) as they as the wind farms come online?

a_flock_of_jayhawks 7 years ago

The wind farm at San Gorgonio Pass east of Palm Springs, CA has been in operation for around 25 years.

Dolly again shows her ignorance. The turbines that are available today are vastly different when compared to the type of windmills typically used as water pumps. Despite that fact, if they weren't able to serve some purpose, then why are there so many of them? And, no, not all of them are purely decorative.

snowWI 7 years ago

its_getting_warmer (Anonymous) says "What is good there should be good here. Close the plants. Save on CO2."

I think they should close the oldest and post polluting plant if it does not meet the Clean Air Act guidelines and expand wind farms, expand Wolf Creek, and build a natural gas plant if electricity demand requires it. ANYTHING is better than a dirty polluting coal plant.

snowWI 7 years ago

"That should be part of a nationwide review of our use of coal-fired plants (which would be, in turn, part of a comprehensive review our entire energy policy) that will lead to the shutting down of older plants, perhaps one or even both of those plants."

This is DEFINITELY more of an issue in the rust belt where the age of many of the cold plants is much older. Many of the coal plants in the eastern US are grandfathered into the system and are very old and polluting. One of the dirtiest plants in the US is located right near Lake Erie south of Buffalo. The Jeffrey Energy Center should be upgraded with state of the art pollution control devices and the public should not have to pay increased rates for those upgrades. The federal government should mandate more stringent regulations for cleaning up the dirtiest coal plants.

snowWI 7 years ago

EDIT: (This is definitely more of an issue in the rust belt where the age of many of the coal plants are much older.)

average 7 years ago

fishcat -

Renewable percentages and 'green credits' are generally taken against a year's worth of production (since there is a fair bit of variation through the year in solar and wind).

Coal plants and nuclear are generally the most 'baseload', meaning they run all the time at the same output level. Both can alter their production (and rate of fuel consumption), but on the scale of many hours. At the other end are natural gas turbine (basically a stationary jet engine) plants. They can go from stopped to full-power in minutes. These are called 'peaking' stations. Hydroelectric plants are sort of in between (open or close the sluice).

To fully account for variability in wind resources, either a fair bit of peaking infrastructure or some method of energy storage is needed. Energy storage has been pretty ineffective (the best has been 'pumped storage', basically a hydroelectric plant that sometimes pumps water to a higher level when there's excess grid power). For peak-load plants, gas is the cheapest to build and they aren't consuming (expensive) gas when there isn't a demand. Some modern nuclear designs are designed to ramp up and down more quickly and smoothly (acting more like peaking plants). Other modern high-temperature nuclear designs may be used to produce hydrogen (for transport fuel) when there's lots of wind energy on the grid and more electricity when it's needed.

badger 7 years ago

fishcat -

If I understand what you're asking, I think the best answer is, "We have a combination of sources to offset shortages in one another, and there is a finite amount allocated to certain weather-dependent sources."

For example, maybe they estimate that 100 windmills will meet the needs of an average population. So, they build 140, which will cover some going offline for maintenance, peak need times, providing backup if something happens on a nearby grid, that sort of thing. They could also have a backup source. Maybe it's a nuke- or coal-powered plant, maybe it's a dam with a variable number of turbines, but if they find that for whatever reason the windmills just can't make it happen, the other source needs to be fairly capable of providing variable amounts of power so that it can cover the extra need.

The mistake we make is in thinking that one form of energy will be the answer. If we shifted to wind, water, and solar as primary sources, we could make our fossil fuels last decades longer by using them as emergency supplemental power sources. By the time we run out, we will have had a chance to locate more replacements for them.

Here in Austin, we have Green Energy. You sign up for the program, and you get the Green Rate, which is a stable rate based on estimated maintenance and construction costs. Austin Energy buys energy from renewable sources based on the size and age of your home. If you use more than you're allocated, you pay a higher 'tier 2' rate; this is to encourage conservation. Due to deregulation, the conventional rate fluctuates a lot, so the stable Green Rate is pretty popular even though it's higher in the summer. Over the last few years, the waiting list for Green Energy has gone as high as 18 months. A substantial part of the city is powered by the Green Energy, and some businesses go so far as to put up stickers or flyers so that customers can choose to patronize environmentally conscious businesses wherever possible.

Rather than a 'green tariff', what Kansas should do is lock in a scheduled rate for green energy. Maybe it's a few tenths of a cent higher now, but forward-thinking people will recognize what will happen when gas prices go up and the KCC grants the gas companies a rate increase for conventional energy - because the green energy rate should stay the same unless there's an unplanned maintenance or construction event (like a tornado hitting the wind farm, which they can't reliably plan for).

Green power is more stable and cheap, ultimately, because it doesn't run on a scarcity model. The big cost is infrastructure; for a comparison, how much of the cost of gas or oil do you suppose covers 'pipeline maintenance' and how much do you think that maintenance fluctuates from year to year?

kneejerkreaction 7 years ago

"Westar, the state's largest utility, says it needs a quick turnaround because wind energy is hot."


This is about the dumbest reason for doing anything. And this from the CEO? I know exactly what Westar's game is.

They want to increase rates.

Increased rates mean increased revenue.

Increased revenue means increased annual bonsues for executives.

And, that's about the long and short of it folks. Utilities are not run by people used to providing competitive services. They are run by people with a, well, Public Utility Mentality. It's all about rate increases.

badger 7 years ago

Clarification:

By 'emergency backup power' I don't mean, "OHNOES! Mrs. Widget just turned on her AC and the grid can't handle the load! Fire it up!" 'Emergency backup power' means "Hey, tomorrow is supposed to be 104 degrees and humid; we anticipate a lot of AC usage; let's open up a couple more sluices on the dam and plan for the extra load at the nuclear plant..." or "Hey, we've had two solar fields taken out by a tornado, we have to run the coal plant at full capacity until we've got them repaired..."

salad 7 years ago

"The Jeffrey Energy Center should be upgraded with state of the art pollution control devices and the public should not have to pay increased rates for those upgrades"

It already has them. The pollution control equipment is a structure that's as big as the entire rest of the plant. It's that way on Hawthorn plant too. Pretty much all that comes out the stack is water, CO2, and heat. Just toured Jeffrey Energy center last month, and Hawthorn last year.

bevy 7 years ago

OK, so they want to build some infrastructure that will probably make them a lot more money - or at least save them a lot of money in the long run - and they want us to pay for it! Cool.

I've always wanted to run a restaurant. I think everyone who eats should send me two bucks so I don't have to invest in anything, I can build my restaurant and then charge people for their food when they come in. Plus I can pay myself a BIG FAT BONUS! Yay!

Have the folks at Westar ever heard of capitalism? If you want to make money, you have to invest in your company.

That being said, I think wind energy is a great idea. If you want to build a wind farm and sell power, go ahead! It's not like you don't have lots of money already. I'll happily buy your wind-generated electricity. Just don't ask me to fund your expansion when you are already rolling in profits.

snowWI 7 years ago

"Pretty much all that comes out the stack is water, CO2, and heat. Just toured Jeffrey Energy center last month, and Hawthorn last year."

That is what they want you to believe. In actual reality CO2, SO2, NOx, mercury, and other nasty things are emitted from a coal plant. They can say that they have pollution control equipment in place at Jeffrey, but how old is that pollution control equipment? KCP&L upgraded the La Cygne coal plant in Linn County with state of the art pollution control devices this year. That should have been done years ago considering that the KC metro has ozone issues, especially in the summer. Here is the source: http://www.cleartheair.org/dirtypower/map.html (Click on the map of KS) Unfortunately the data is a little old.
2002 emissions from the Jeffrey Energy Center: CO2- 18.7 million tons SO2- 67,300 tons NOx- 31,301 tons Pounds of Mercury- 990 ETC

63BC 7 years ago

If the Holcomb plants had gone forward, the juice generated from coal would've paid the freight on the transmission lines for wind. Instead, they're going to hit ratepayers, and the people who pay the largest percentage of their incomes to utility companies are those least able to pay.

The costs of the Holcomb denial are far greater than this Administration is letting on, and many of the most vulnerable will be hardest hit.

average 7 years ago

Uh, yeah Marion. An F-3 to F-5 would do damage at a wind farm. An F-3 to F-5 bearing down on Jefferey Energy Center would too. That latter would cause rolling blackouts to the region for quite a while and cause a major environmental headache at the site. A tornado through a wind farm might destroy a dozen insured turbines... not a significant percentage of turbines installed in Kansas even today. The falling windmill might flatten some milo, but probably nothing that wasn't being damaged in the tornado anyway.

toefungus 7 years ago

Marion! They could ride to the Queen tune, "Bicycle".

georgeofwesternkansas 7 years ago

Weststar is scrambling to meet the gov's demand that Kansas utilities be 10% green by 2010, so they can get their air permits renewed next year. They have been spending all their money paying for Dave and Doug who the owners let rape the utility payors in Kansas. The KCC is an extension of the gov and Weststar's polotical donations, so get ready eastern Kansas, bend over and take it, you elected her.

Ken Lassman 7 years ago

average, Thanks for the explanation of how the grid maintains the juice to our homes and businesses through a combination of baseload coal/nukes/hydro, supplemented when needed by peak gas powered plants, and how energy is not really stored on the grid. This has clarified to me how the best way to a secure energy future is to build our capacity in wind, solar and renewables and go heavy on energy efficiency and energy conservation. Conservation/efficiency will keep pushing back the need to build new plants since we can do more with less; renewables, while not being completely reliable as a baseload, can provide a significant source that will pay for the investment in short order and provide a more more stable energy grid in the long run. I like badger's example of how Austin is financing this kind of development--it's good enough for Texas so why not for Kansans, to?

The following article points out that the more you rely on a few large energy sources, the more "brittle" it becomes and the harder it becomes to recover from a major failure. Like you say, average, it's a lot easier for a wind farm to recover from a tornado than for Jeffrey Energy Center!

http://www.rmi.org/images/PDFs/EnergySecurity/E03-06_TowerDsnFlaws.pdf

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