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Kansas legislature

Kansas Legislature

Senate OKs proposal to allow coal plants

Congressman questions federal role in plan

February 15, 2008

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— The Kansas Senate on Thursday approved a bill to build two coal-burning plants in southwest Kansas, but a powerful U.S. congressman put the project in his crosshairs.

"If this plant is built, Kansas ratepayers may be stuck with billions of dollars in stranded assets and skyrocketing costs for power," said U.S. Rep. Henry Waxman, D-Calif., who is chairman of the House Oversight and Government Reform Committee.

Waxman called for a comprehensive review of the federal government's role in helping build coal-fired plants - and he specifically cited the project proposed by Hays-based Sunflower Electric Power Corp.

He questioned the federal Rural Utilities Service's reasons for allowing Sunflower Electric to go forward with its plans, citing potential federal regulations on carbon dioxide emissions, and increased financial concerns about bankrolling such plants.

"I am concerned, however, that RUS may not have accounted for all the risk of substantial additional costs associated with the new plant's massive greenhouse gas emissions," Waxman wrote in a letter to James Andrew, the administrator of the Rural Development Utilities Program.

Steve Miller, a spokesman for Sunflower Electric, said Waxman's concerns about Sunflower and the project were unwarranted.

"To most observers in the cooperative (utilities) world, they would find us to be in good shape," Miller said. "It's not for us to make a judgment as to whether Congressman Waxman should or should not hold hearings. If Congress wants to investigate, investigate all they like," he said.

Meanwhile, the Kansas Senate gave overwhelming approval to a bill that would essentially require the state to approve the two 700-megawatt plants near Holcomb.

The final 33-7 vote was more than enough to override a possible veto from Gov. Kathleen Sebelius, who has been highly critical of the bill.

The bill was drawn up to reverse a decision last year by Kansas Department of Health and Environment Secretary Roderick Bremby. Bremby denied the plants because of concerns about the project's 11 million tons of carbon dioxide emissions per year.

The plants are opposed by numerous environmental groups, the attorneys general of eight states, and the Lawrence City Commission.

But supporters of the plants said the $3.6 billion project and 2,400 construction jobs would boost the economy while putting up one of the cleanest coal-burning plants in the nation.

The legislation would allow construction of the plants and limit Bremby's authority to stop the construction of other plants.

Lawrence's delegation split on the issue with state Sen. Roger Pine, R-Lawrence, supporting the bill, and state Sen. Marci Francisco, D-Lawrence, in opposition.

Francisco said the measure increases the state's "carbon footprint" and makes no plans for "a forward looking solution."

After voting for the bill in committee, Pine said that more coal-generated power had to be part of the mix in Kansas, and that Sunflower's proposal included new technologies to offset CO2.

The House is expected to take up its version of the bill next week.

Some senators who voted for the measure said they expected negotiations to continue. Sebelius has offered to support one 660-megawatt coal-burning plant, but Sunflower has rejected that.

Comments

SettingTheRecordStraight 6 years, 10 months ago

Thank you, Senators.

It's time for the Sierra Club/Earth Liberation Front types to join the rest of us here in reality and stop fighting progress.

dirkleisure 6 years, 10 months ago

"Progress." Let's all switch from cable or satellite back to giant antennas up on the roof.

That is what coal is the equivalent to. Progress, indeed.

Even the Bush Administration has determined that wind generation is a cheaper form of energy than coal. I guess they are now part of the Earth Liberation Front.

Ken Lassman 6 years, 10 months ago

Since the Kansas Legislature is so bent on building the coal fired plants come hell or high water (both attributed to global warming, perhaps?), the feds are checking into why the Rural Finance folks are so willing to run the risk of saddling ratepayers with huge bills once the feds start charging for carbon emissions. Kinda scary when your state legislature is more fiscally irresponsible than the feds! Check it out at: http://www.kansascity.com/news/local/story/490873.html

Bill Griffith 6 years, 10 months ago

Westar did some repair/upgrades to LEC. Repairs do not trigger a requirement under the Clean Air Act/New Source Review to put in new equipment. However, if what is being done falls under the definition of "upgrade", then new pollution-control equipment must be added on. EPA determined some time a few years back that Westar had some violations, possibly due to interpretation of the rules and now is required to add the equipment and possibly pay fines. I don't think EPA views this as criminal and it may be normal since the rules are subject to some interpretation. I have not looked into this enough to know the exact nature of the violations and a timetable for EPA and Westar to wrap this up. This case is different then the one under investigation concerning BPU. BPU has come under the gun by EPA over evidence that they (allegedly) knowlingly violated the Clean Air Act umpteen times and the Department of Justice is involved in that case. BPU still has EPA to deal with, but apparently the Sierra Club has backed off of them since BPU announced they are scrapping plans to build a new coal plant. The BPU material has been in the KC Star quite abit last summer and fall. You know, now that I think about it, I wonder if there were any violations at Westar's Jeffrey Energy Center? Hmmmm.......

justthefacts 6 years, 10 months ago

Reality? Really? I am not very informed on coal plants, to be sure. However, I would be very interested in more facts if someone cares to provide them. Are there any facts out there that would answer these questions: (1) How may new coal plants have been built in the USA in the last 5 years, and where; (2) Given that the air in Europe used to be yellow with coal plant emmissions, is there any fool proof way to insure that our air quality will not be negatively impacted by such plants? and (3) Isn't coal a product that cannot be made by man, and thus will run out of it in time?

If the answers to the above questions come back as I expect they will (factually), then why in the wide world would Kansas law makers be so eager to build one anywhere in the state? Could it be that MONEY is involved (to do to their constituents or line own campaign war chest pockets)?

justthefacts 6 years, 10 months ago

Reality? Really? I am not very informed on coal plants, to be sure. However, I would be very interested in more facts if someone cares to provide them. Are there any facts out there that would answer these questions: (1) How may new coal plants have been built in the USA in the last 5 years, and where; (2) Given that the air in Europe used to be yellow with coal plant emmissions, is there any fool proof way to insure that our air quality will not be negatively impacted by such plants? and (3) Isn't coal a product that cannot be made by man, and thus will run out of it in time?

If the answers to the above questions come back as I expect they will (factually), then why in the wide world would Kansas law makers be so eager to build one anywhere in the state? Could it be that MONEY is involved (to go to their constituents or line own campaign war chest pockets)?

justthefacts 6 years, 10 months ago

Hmmm. Don't know why the double post. Sorry!

kansanjayhawk 6 years, 10 months ago

The reality is that these plants are legal and there is nothing sinister or evil about them. If you use electricity to power your home you should be thankful for them. The proposed plants in western Kansas actually are much cleaner than the plant right here in Lawrence and Secretary Bremley has chosen to allow that plant to be authorized. This is actually reactionary liberalism at work creating a problem where there is none.

Bill Griffith 6 years, 10 months ago

Whatever one thinks of Waxman's political leanings, he is well respected on the Hill as the foremost Congressional investigator. Waxman does not have a history of willy-nilly letters and threats, but gets his ducks in a row and then begins pressuring his committee's target. This bears watching. The first item I would like to see is what the price impact of carbon regulation would be to Holcomb II. Obviously, there would be some different scenarios here. If folks in Liberal are paying 15 cents retail a kilowatt hour (someone please confirm or adjust) now for electricity and a new coal-fired power plant is 7 to 8.5 cents per kwh (wholesale), what would the added retail costs and CO2 regulations bring the total cost to in 2013, 2018, 2025, 2030, and 2035? Fascinating stuff.

Bill Griffith 6 years, 10 months ago

I will differ with you on Waxman's effectiveness. I am not commenting on his values, but on his effectiveness. As far as baseball goes, apparently pressure is being put on MLB and the union to go for more stringent testing. That would be the end result. There does not need to be federal legislation often to get compliance that a particular committee desires, just the concept of more oversight which most organizations prefer not to have happen to them. I won't run electric rate numbers for Lawrence but will probably ask someone in Lawrence who actually knows what their own particular rate is. My fairly educated guess is it is around 7 cents per kilowatt hour. For perspective in NE Kansas, BPU has a rate of a little over 10 (it varies summer to winter), and is, I believe, the highest rate in Eastern Kansas outside of rural electric cooperatives. However, someone correct me if they have knowlege of a rate higher, as I am not going to hunt down muni and cooperative rates. RUS projections with regards to CO2 will probably be 2-6 months from now-who knows. My shot in the dark is that with many of the scenarios, w. Kansas (Sunflower areas) will have a lower rate in the first 5 years under a CO2 cap then they currently experience (assuming the construction of Holcomb II), however, as time goes by they will face a rate higher than what they now have from Sunflower power generation.

Bill Griffith 6 years, 10 months ago

Kjhwawk, Bremby did not authorize LEC.

Also, for me personally, my "thankful" index with regards to electricity starts in intensity with energy efficiency, conservation, solar power, wind power, and dwindles down to coal. Right now, I freely acknowledge that I am stuck to some degree with coal, but as I have winnowed my electric bill down to an average of less than 30 dollars per month, I also see within 5 years of having even less reliance on coal because of: my electric provider's investment in windpower, my own continuing investment in energy efficiency, and the likelihood of some solar generation at my own home.

Richard Heckler 6 years, 10 months ago

Representative Waxman has launched an inquiry into whether the Rural

Utilities Service has provided loans to rural utilities to build coal-fired power plants without considering the financial impact that future greenhouse-gas regulations are likely to have on those plants. Waxman referred directly to the Sunflower coal plant proposal.

"If RUS failed to take (CO-2 regulations) into account, it has put both taxpayer funds and Kansas ratepayers in jeopardy," Waxman wrote. "If this plant is built, Kansas ratepayers may be stuck with billions of dollars in stranded assets and skyrocketing costs for power."

Read the entire article at http://www.kansascity.com/news/local/story/490873.html

Logan5 6 years, 10 months ago

Okay, let's apply some simple math. 11 million tons/year of CO2 at $30/ton = $330 million/year. 1400 MW of peak power production will produce roughly 5.5 million MWh of electricity per year at say $.07/kWh at an average of 45% capacity. That about $386 million worth of electricity. So a $30/ton carbon tax would raise the cost of electricity by about 330/385 = 86%.

dirkleisure 6 years, 10 months ago

Yes, Rep. Waxman has launched an inquiry into how Sunflower plans on paying for its $3.6 billion with a b coal plants when the political climate shifts against it.

Why on earth are the ratepayers in Kansas being asked to pay for this?

And yes, I said Kansas. Check out the legislation introduced this week for rate equalization. Turns out the Legislature is also moving to provide a way for ratepayers in the entire state of Kansas to pay for Sunflower's $3.6 billion with a b albatross.

Sounds like the people of NE Kansas may have a dog in this fight afterall - skyrocketing rates for electricity due to a $3.6 billion with a b coal plant that is obsolete the day it goes online.

snowWI 6 years, 10 months ago

IGW, What do you think about these new developments regarding Waxman's inquiry?

Bill Griffith 6 years, 10 months ago

Dirkleisure, could you lift out the quote concerning rate equalization and share it with us?

Bill Griffith 6 years, 10 months ago

Logan5's projected calculations would put Sunflower's wholesale rates at about 13 cents at 30 dollars a ton. Of course, we don't know when the CO2 cap will get to 30 dollars-but it will. What I don't know is the percent of add on costs from wholesale to retail for Sunflower right now. Westar's avoided cost of fuel is about 2 cents or so, then you factor in all their other "stuff" and we get 7 or 8 cents per kwh for them. However, their profile could be very different than Sunflower's, so I hesitate to make this comparison. It does give some clarity to projections, but more research is needed-and with the talent on this thread, we might get darn close.

TNPlates 6 years, 10 months ago

Kansasjayhawk,

The big difference between the Holcomb additions and the Lawrence plant is that two are neither built nor operating and one is. The Lawrence power plant was built at least 30 years ago - way before Bremby was Sec. of KDHE. He's had no chance to deny that permit. And even if permits come up for re-evaluation (which they probably do), I'm sure the criteria for denying a permit of an existing plant is more onerous.

The argument by most of the coal plant opponents has not been about closing down all the coal plants, but not building more. If we're trying to get a grip on carbon emissions, as I think we should be, then how do you do that by adding to the problem when you're trying to figure out how to lessen the problem?

I noticed several KS Senators liked to point out the apparent hypocrisy of Lawrencians being opposed to the Holcomb additions, but having a coal plant themselves. Yet, I guarantee you if this addition was planned for Lawrence, the outcry against it would be much greater! (Of course then, the coal-lovers would be crying NIMBY...)

TNPlates 6 years, 10 months ago

Ok. I don't know the process by which a permit is applied to/issued. I would have guessed that as is true with SOx and NOx in the cap-and-trade system, once a plant is operating it's given "rights" to emit some amount and would think that regarding the reissuance of a permit, so long as the plant is within those limits it's pretty straight forward. I would also guess that for new plants, the criteria is different. I realize CO2 is a different animal - no criteria exist, but would expect consideration for new vs. existing would be the same.

Anyone know whether other coal plant permits have come up for reevaluation since the Holcomb denial? Is it an annual deal or every few years?

Bill Griffith 6 years, 10 months ago

Westar is up for repermitting for LEC. However, due to some violations, EPA is involved. I am not sure how much EPA has of this particular pie and how much is still in KDHE's hand.

Bill Griffith 6 years, 10 months ago

SnowWI, thanks for the update from the KC Star website concerning veto override votes. I am sure both sides have been doing head counting and attempting to cajole fence-sitters off of their usual perch. I would be interested to know if this legislation does manage to make it past a veto override if it will be challenged in court? Also, would this clear the table of the other lawsuits filed in Kansas? It obviously wouldn't have any influence on the RUS lawsuit and the Waxman investigation, but would this make things clearer or murkier from a legal perspective here in Kansas? Lawyers, feel free to weigh in.

Bill Griffith 6 years, 10 months ago

IGW, I agree that speculation on final legislation that the House and Senate agrees to (or any amendments that can be attached to other legislation) is not in front of us to read. However, we do know that it would disallow CO2 regulation at the very least, and possibly some other restraints on KDHE. However, it seems that some of the regulatory scheme could come into focus by the Kansas Supreme Court ruling on the various cases that it has taken to its bosom over this issue. This is of course, after Sunflower exhausts administrative appeal, which I assume they are doing. I would think that allowing that process to move forward and be completed would give the legislature a clearer picture on what they felt could or would need to be changed. Also, by then, we should have a pretty clear picture of what CO2 regulation will look like from Washington. That being said, I understand that two points on the other side are: continued regulatory uncertainty in Kansas and delays adding costs to Holcomb II. I would assert (and you will remain skeptical) that regulatory uncertainty will be cleared up by KDHE issuing regulations on CO2 for only coal-fired power plants (according to Bremby). This of course, will take 3-15 months to give confidence back to certain types of businesses. The cost issue is a tougher nut to crack. The cost of steel has driven up the cost of new coal and wind power both. According to an industry rag I perused, delaying a coal project one year will add 10 to 20 million dollars in cost. Wall Street is becoming increasingly skittish about funding new coal proposals until they see the federal CO2 numbers. This reality gives Sunflower supporters in Topeka added emphasis to get something through now and circumvent the judicial process to some degree. However, legislation crafted quickly often has unintended consequences.

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