Lawmakers concerned about costs of proposed Clean Power Plan

? The chairman of the Kansas Senate Utilities Committee said Tuesday that lawmakers may have to decide this year whether to comply with proposed new clean-air regulations aimed at reducing carbon emissions from power plants or to fight those new rules in court.

“I think we might see legislation by the end of session on it,” said Sen. Robert Olson, R-Olathe. “Probably litigation, but I don’t know for a fact.”

Olson spoke after state environmental and utility regulators briefed the panel on the Obama administration’s proposed Clean Power Plan, which aims to reduce carbon emissions from power plants 30 percent by 2030.

That program, which is expected to be finalized this summer, would require states to adopt their own plans to meet those targets, but it also authorizes the Environmental Protection Agency to impose plans on states that do not comply.

“We estimated the Clean Power Plan could cost $8.5 billion in Kansas,” Jeff McClanahan, director of the utilities division at the Kansas Corporation Commission, told the Senate Utilities Committee.

McClanahan said three elements of the plan would most directly affect Kansas: requirements to upgrade coal-fired plants to reduce carbon emissions; to shift a greater share of the total energy production to renewable sources such as wind and solar power; and to invest in energy-efficiency programs to reduce electricity demand.

The biggest problem in Kansas, McClanahan said, is that utility companies are still trying to recapture more than $3 billion in investments they made to upgrade coal plants to comply with earlier clean-air rules on sulfur and other emissions.

Because the timetable in the proposed Clean Power Plan calls for such steep reductions in carbon emissions over such a short period of time, he said, some of those coal-fired plants may have to be retired before the utilities recover those investments, resulting in what are called “stranded costs” that, by law, the companies would be allowed to pass on to consumers.

“Utility ratepayers would still be required to pay because it was outside the utility’s control,” he said.

But others said that while higher costs will be involved, they may not be as high as the KCC predicts, mainly because the Clean Power Plan also calls for investments to help consumers become more energy efficient, which would reduce their total energy use and the size of the bills they pay.

“There could be things that we do that could save consumers money,” said David Springe, head of the Citizens Utility Ratepayer Board, an agency that lobbies on behalf of consumers before the KCC. “We’ve not really had a broader policy discussion about, if we have to make changes to the system to meet these new goals, what is the best and least-cost way to go about it?”

Tom Gross, who heads the air monitoring and planning section at the Kansas Department of Health and Environment, said if the EPA finalizes the regulations, states would have one year to develop a plan for a nearly complete overhaul of the way electric power is generated and transmitted in Kansas.

“This could be one of the biggest, most comprehensive, sophisticated plans we’ve ever had to develop, and we will have the shortest amount of time we’ve ever had to develop a plan to do it,” Gross said.