You may have gotten a postcard from GPACE in the last week.  You may also have gotten phone calls from our phone bank over the weekend.

If you live in Kansas, and have taken an action on behalf of GPACE, or supported GPACE financially or attended one of our events, we have contacted you asking if you’d like to make a public comment to the Kansas Department of Health and Environment regarding the proposed Sunflower Electric/Tri-State G&T coal plant.

There are a lot of you – that list is pretty big.

We are reaching out to you because it’s important.  The KDHE public comment process is probably your last opportunity to have your voice heard regarding the proposed coal plant and perhaps your best opportunity to influence the state’s – and the nation’s – energy policy.

How do I get to state and national energy policy from a single coal plant permit process?

In the wake of Congressional failures to create national energy policy, this article is a stark reminder of the huge importance decisions like the proposed Sunflower Electric/Tri-State G&T Holcomb coal plant have for the future of our nation. With no meaningful federal energy legislation, the process of deciding the nation’s energy policy will occur at the state and regional level.

The Kansas coal plant debate has been in the national spotlight for three years now. The pending decision about this huge, unneeded coal plant in Kansas will have legal and regulatory ramifications that will likely impact national policies.

But the impacts start closer to home.

If Kansas commits to this coal plant boondoggle, it will almost certainly reduce the amount of wind and other renewable energy we can produce and distribute.  That in turn, will reduce interest in Kansas as a center of wind energy development, manufacturing, and services.  This despite the fact that we have the nation’s second-best wind resource.

Also of note: the total amount Kansans spend to import coal ($518 million) is greater than the recent mid-year budget deficit ($510 million) that required a tax just to close the gap.

And the real owner of the coal plant is on record stating that they do not anticipate construction starting on the coal plant (if it is permitted) until 2016 at the earliest – contradicting claims by some unions and Sunflower Electric representatives.  So, no construction jobs will be created until at least 2016, and no energy until at least 2020.

The proposed coal plant is a legacy decision that so far is being decided by out-of-state special interest money and misinformation.  No wonder, given the money and national policy implications that are at stake.  If this is all about jobs for Kansans, why are union members from Missouri and Iowa sending pre-printed postcards favoring the coal plant?

We thank you for your interest and for all that you have already done.  We remain committed to a cleaner, more prosperous Kansas for generations to come.  If you are also committed to that goal, KDHE needs to hear from you now.

You can provide a comment to KDHE and get more information here.

Many thanks,

Scott Allegrucci

Director

Please join The Great Plains Alliance for Clean Energy and The Resilience Group for an evening of discussion on the energy future of our state and country.

Dr. Nate Hagens, former editor of The Oil Drum, will lead a discussion on global energy supplies and their implications on our future. Following his presentation, staff from GPACE and the Kansas Sierra Club will provide information on how to effectively submit public comment to KDHE on the proposed Holcomb coal plant. For more information, please see this flyer put together by The Resilience Group.

Tuesday, July 27 at 7:00 PM

Kansas Wesleyan University

Peters Science Hall, Room 201

100 East Claflin Avenue

Salina, Kansas

Refreshments will be provided.

This is no cost to attend this event.

Please RSVP to info@gpace.org

Please join the Great Plains Alliance for Clean Energy and the Kansas Sierra Club to learn more about the proposed coal plant and how you can provide effective comments to KDHE.

Featured Guest Speaker: Leslie Glustrom

Leslie Glustrom is a founding member of Clean Energy Action. Training as a biochemist, she resigned from her job at UC-Boulder to work full time on climate change and clean energy issues. Leslie is recognized nationally as an expert on PRB coal supply issues.

July 22 in Lawrence

5:30 – 7:30 PM

The Depot (and Visitors’ Center)

402 North Second Street

Dinner from Local Burger and beverages will be provided.

Featuring Rep. Annie Kuether, Ranking Minority Member of the Kansas House Energy & Utilities Committee

July 23 in Overland Park

5:30 – 7:30 PM

Johnson County Community College

Capitol Federal Conference Center (on the first floor of the Regnier Center)

12345 College Boulevard

Light sandwiches, appetizers, and beverages will be provided.

Featuring Nancy Jackson, Board Chair for The Climate and Energy Project

There is no cost to attend either of these events.

Please RSVP to info@gpace.org

Click here to download a printable PDF of this informaton.

To Kansas Clean Energy Supporters:

The Kansas Department of Health and Environment released the schedule for the public comment period and hearings on the proposed Holcomb coal plant project. The comment period begins today, July 1, and ends August 15 (which means that comments can be submitted directly to KDHE outside the public hearings any time during this period).

Three public hearings have been scheduled for the first week of August:

• August 2 in Overland Park at Blue Valley Northwest High School
• August 4 in Salina at Highway Patrol Training Central Auditorium
• August 5 in Garden City at Garden City Community College Joyce Auditorium

Each hearing will begin at 2:00 PM. Hearings will break at 5:00 PM and reconvene at 6:30 PM, continuing until all written or verbal comments have submitted.  Note that the hearings start in KC and move west to Garden City.

You may see public statements indicating the “issuance of a draft permit” – this is technically correct, but misleading.

KDHE has issued a draft permit that is now the subject of the public comment process.  As with the previous process in 2007, that draft permit can be altered or amended at any time by KDHE or EPA, right up until the very end of this process.  It can also be denied.  The public comment period could also be extended if necessary.

GPACE will be posting more information in the coming days that can help inform your comments, including topical fact sheets about the impacts of the proposed coal plant project.  A form is up on our website now that allows citizens to submit comments which we will then deliver to KDHE. This form is at http://www.gpace.org/publiccomment/.

And next week keep an eye out for the first e-newsletter from GPACE with information about the proposed coal plant project, the public comment process and hearings, and breaking news and information about this entire process.

Again, please be on the lookout for more information in the next few days, and mark you calendars for these hearings.

Many Thanks,

Scott Allegrucci

Director

As the Kansas Department of Health and Environment considers the new air quality permit request for Sunflower Electric’s proposed 895mw coal-fired power plant, and before KDHE announces the schedule for public hearings, it seems like a good time to ask:  Why are we still paying attention to the whole coal plant debacle?

This blog originally ran over seven consecutive days at www.gpace.org, addressing seven of the most common questions we have heard regarding the ongoing energy policy – coal plant debate in Kansas. As the public comment period approaches for this project, the following questions could be helpful resources as you prepare to write your comment.

Governor Parkinson duped Sunflower with the whole compromise agreement, right?  That coal plant will never get built, even if they get a permit, right?

Well, no.  If Sunflower gets a permit for the current proposal, their odds of getting financing, getting grandfathered by Congressional deal-making, and/or getting the next state administration to give them another coal plant permit (or two) increase significantly.  With coal plant proposals dropping like flies nationwide, the last coal plant built prior to carbon regulation (although risky) might not be a hard sell to struggling capital markets.  As such, a permit in hand is a kind of currency at this point for coal plant developers.

Whether Governor Parkinson knew that, and whether he was concerned about it, is anybody’s guess.

Okay then, Parkinson guaranteed Sunflower a permit, so it’s a done deal, right?  No sense in continuing to fight it.

No, again.  The fundamental result of the settlement agreement between Governor Parkinson and Sunflower Electric – and the subsequent legislation passed by the Kansas Legislature – was simply to concede that they (the governor and pro-coal legislators) could not create a comprehensive energy policy for the state, and to punt the difficult tasks to the federal government.

The governor and the legislature removed even the potential of regulatory and rate oversight over Sunflower by the Kansas Corporation Commission, and stripped the Kansas Department of Health and Environment of any state authority over air quality.  But the truth is, neither the governor, nor the legislature, nor a single utility has the ability to unilaterally ignore the existing enforcement agreement between the State of Kansas and the Environmental Protection Agency.  KDHE still has a binding, legal obligation to enforce the federal Clean Air Act on behalf of EPA.

And EPA has already indicated that it has some serious concerns about the Sunflower permit request under existing CCA regulations.

All right, but don’t we need a new coal plant to “keep the lights on” in Western Kansas?

No, we don’t.  Sunflower Electric reported to the Kansas Corporation Commission in 2008 no gap between its current electrical capacity and projected demand until 2018 – and then it’s only 14 megawatts.  Their projections allow for a required 12% capacity reserve cushion, but do not include any energy efficiency measures to reduce demand or any wind or new sources of renewable energy that could be integrated by or before 2018, nor do they account for the significant (nationwide) decrease in the demand for electricity related to the economic recession.

Throw in Midwest Energy and there’s another 16 mw needed by 2018 (for a total of 30mw). That’s a long way from the 895mw capacity of the proposed coal plant.

There is enough current production capacity in Kansas to meet statewide projected demand for electricity past 2018 (again, without using any energy efficiency measures, bringing no new renewable energy online, and assuming that demand for electricity will increase as projected – which it has not).

Two other things to keep in mind:

• The proposed coal plant will take at least 5 years from the start of construction to even begin to produce electricity.  If there are urgent concerns about the power supply in Western Kansas, why wait so long to deliver “needed” electricity?
• Sunflower Electric had a permit to build a 660mw coal plant (the Sand Sage Project), which they let expire in 2005.  If there is such a critical shortage of electricity in Western Kansas, why didn’t they build that plant, which would be operational and providing electricity by now?

But they’re going to export all that extra electricity, right?

If Sunflower Electric actually owned all that extra electricity, perhaps they could export it.  But they won’t own the extra electricity.  They won’t even own the coal plant.  Tri-State (a Colorado utility) is currently the equity owner of at least 80% of the proposed coal plant itself, and will own 80% of the electricity produced.

In fact, as of 2008, Tri-State had spent $46 million on the Holcomb coal plant proposal, not including land and water rights.  By 2008, Sunflower hadn’t even made a dent in its multi-hundred-million dollar debt to American taxpayers for the first coal plant they built.

It’s like this:  Two people buy a $1000 horse, and one of them pays $1000 while the other one agrees to keep the horse in his stable.  When the $1000-partner wants to ride the horse, she doesn’t pay the owner of the stable for the privilege of riding the horse she already owns.  Likewise, Sunflower Electric can’t export to Tri-State (or anyone else) electricity that Sunflower Electric doesn’t own.

So, if electricity ever moves from the proposed coal plant to Colorado, it will be because a Colorado utility already owns that electricity, not because Sunflower is selling it as an export product.

Okay…but the coal plant will provide needed jobs and economic development to Kansas in the midst of the worst recession in recent memory.  How can we say no to that?

Because it won’t – not anytime soon.  It is absolutely important to create jobs and investment in this recession.  But given all the regulatory, legal, and financial issues with the proposed project, construction won’t begin for at least a couple of years.  So, the construction jobs won’t exist until then.   How does that help Kansans now?

When they were lobbying the legislature, coal plant supporters claimed the proposed project would generate thousands of construction jobs for Kansans and as many as 400 permanent full-time jobs in the state.   But here’s the fine print:

• Tri-State is driving the project, and has a long relationship with its own coal plant builder – and it isn’t a Kansas company, or a union company.

• The specialized nature of most of the construction, and the absence of many of the needed specialized laborers in Kansas, means that the vast majority of the construction jobs will go to temporary workers from out-of-state.  Once construction finishes, they and their money would leave Kansas.

• Well after the settlement agreement was signed, Sunflower Electric quietly revised the projected permanent jobs figure down to 50.

• As of 2008, the Colorado utility that will own most of the plant and its power had given Sunflower Electric $46 million in direct payments, EXCLUDING the purchase of land and water rights in Kansas.  We know coal plant supporters hired a small army of lobbyists and lawyers (many from out of state) and bought a bunch of paid advertising to sell the project, but how many jobs has the coal plant created in Kansas with all that money in the midst of this recession?

While Kansas needed jobs and economic development, coal plant supporters blocked or slowed needed transmission and other energy investments that could have put Kansans to work.  In fact, in the midst of the worst recession in recent memory Sunflower and their allies forced Kansas to say “no” to critical jobs, investment, and revenue from native Kansas fuels and the booming renewable energy sector.  All for some coal plants that will import fuel and construction workers, and send water, electricity, and billions of dollars to other states – long after the current recession has turned toward recovery.

Speaking of renewable energy, don’t we need the coal plant to get transmission lines so that we can export our wind energy?

No, absolutely not.  The bulk of the transmission that would come as part of the coal plant project would be to move electricity from the plant to its primary owners in Colorado – not to improve or enhance the overall transmission grid in Kansas.

An operational coal plant cannot efficiently ramp up or ramp down production of electricity.  Therefore, once a large coal plant is burning coal (already purchased on long-term contracts) to generate electricity, it will flood available transmission with that electricity.  Transmission lines have a finite capacity – that is, they can only move a certain volume of electrons, like a two, four, or eight-lane highway each moves a certain number of vehicles.  As a result, the coal plant will effectively crowd out other sources of electricity, like wind turbines.

Additionally, a regional plan to build high-capacity transmission tapping the vast wind energy reserves of western Kansas and the Texas and Oklahoma panhandles is already underway independent of the proposed coal plant.

Also worth noting: the best markets for Kansas wind energy – with the highest demand for renewably generated electricity, the least ability to meet those demands, and the lowest costs for delivering the electricity – are arguably to the east/southeast, not to the west where there are existing local wind energy reserves and a phase-shift barrier.

Certainly, construction of a power plant will create some transmission infrastructure in order to move electricity toward demand.  But that does not need to be a coal plant – it could be a natural gas plant as well.  And we are seeing development of transmission infrastructure independent of any new power plants.

So it is not accurate to say that Kansas must have this proposed coal plant in order to get transmission infrastructure for wind energy.

Well, if it’s not about the jobs, or energy needs, or exporting electricity, what is the proposed Sunflower Electric coal plant about?

Exactly.  If the proposed coal plant is not the best available way to address jobs, energy needs, or economic development, why would most Kansans support it?

In fact, most Kansans don’t support it, and neither does GPACE.

The coal plant proposal has been advanced and codified into Kansas law using misinformation.  The state has been stripped of its ability to set air quality standards that benefit all Kansans for generations to come, just to allow this one unneeded coal plant to be built.  Those actions open the door for Kansas to become the dumping ground for future coal plants that other states do not want to build or operate.

All this, while our nation struggles to rebuild our economy, create lasting jobs, assert critical leadership in the exploding renewable energy economy, and Kansas squanders its abundant native fuels, including wind and natural gas.

The coal plant project does not fundamentally address Kansas energy needs or economic opportunities.  It will be financed and owned by out-of-state utilities.  Kansas’ dwindling water will be used to make their electricity, while burning imported coal will pollute the lungs of Kansas children.  It will make Kansas more dependent upon imported fuel.  And it will expose Sunflower ratepayers and Kansas taxpayers to increased costs.

Bottom line:  The proposal allows Tri-State Generation and Transmission Association to avoid stiff (and expensive) public opposition to a coal plant in Colorado.  Sunflower Rural Electric Power Corporation in Kansas has a history of questionable risk and business management (with taxpayer bailouts to prove it).  Combine those realities with manufactured partisan political hysteria about energy production and environmental accountability, and you’ve got the current coal plant proposal.

Kansas can do better.  In fact, given economic and environmental realities, we must do better if we are to remain competitive in the world we share.

That’s what we’re fighting for.  Join us.

Over the course of the last two and half years, a Kansas electrical utility, a Colorado electrical utility, and their allies in the Kansas legislature and Governor’s office have used political games to put their self-interest ahead of our state’s best interest and shut Kansans out of the decision-making about our energy and economic future.

We’ve already shown that Sunflower Electric’s proposed 895-MW coal plant isn’t about jobs, or energy needs, or exporting electricity, and that it isn’t even for Kansas. But it is important to note that this project isn’t just about the future of Western Kansas either. The harmful health effects stemming from this coal plant will affect citizens across the entire state of Kansas for generations to come.

Recently, Physicians for Social Responsibility issued a report showing that coal emissions contribute to four of the five leading causes of death in this country. That means that although Sunflower claims this plant will be the “cleanest in the country,” if it is built, Kansans will be at an increased risk for heart disease, cancer, stroke, and lower respiratory diseases, such as chronic bronchitis and emphysema. So although Colorado is poised to get 80 percent of the energy produced by the plant, Kansas will be stuck with 100 percent of the pollution and 100 percent of the health risks.

As a result of their findings, Physicians for Social Responsibility called for an end to construction of new coal plants “so as to avoid increased health-endangering emissions of carbon dioxide, as well as other criteria pollutants and hazardous air pollutants.”

Through my work with GPACE, I’ve watched as hundreds of Kansans sent letters to their lawmakers and wrote letters to the editor calling for just that – the end of an era of dirty coal in our state and the chance to move forward into a prosperous clean energy future.

Our voices were ignored by too many legislators and by the current Governor when they turned a secret deal to build the first of several coal plants into state law.  But now that Sunflower has been forced to refile their air quality permit as a result of EPA’s concerns about the proposed project, we – the people of Kansas – will once again have the opportunity to voice our concerns to the agency who will ultimately be making the final decision.

When the Kansas Department of Health and Environment opens up the public comment period for Sunflower Electric’s Holcomb project, this non-partisan process will be a breath of fresh air, as Kansans will no longer have to put their faith in elected officials more concerned with re-election, partisan politics, deal-making or the needs of corporate special interests, than with good policy and the health of Kansans.

As of this writing, Sunflower Electric still had not provided all the necessary information for their permit request. When the permit application is complete and KDHE has finished their initial review, the public hearing schedule and comment period will be announced. GPACE has requested that five public hearings be scheduled to accommodate all interested parties across the state. We will alert our members as soon as the hearings and comment period have been scheduled, and we will provide details on how Kansans can participate in the hearings and provide written comments to KDHE.

In the meantime, you can start preparing for these public hearings and the public comment period by thinking about why this issue is important to you. Check out the GPACE blog archives for a comprehensive look at all of the facts surrounding this project. Talk to your friends about why they should be engaged in this issue, as well. (With 75% of Kansans opposed to this project, chances are good that you’ll meet a receptive audience!) And most importantly, be on the look out for the official details on the public comment period to be released soon.

- Kelly Jacobsen, Great Plains Alliance for Clean Energy

The following is a transcript of comments and questions from the Great Plains Alliance of Clean Energy to Tri-State Generation and Transmission Association, Inc., presented on Wednesday, May 19th at Tri-State headquarters in Westminster, Colorado.  These comments were accompanied by a few basic PowerPoint slides.

The meeting was one in a series of public meetings required by Tri-State as part of a settlement agreement allowing Tri-State to avert potential regulatory oversight by the Colorado Public Utilities Commission.  You can learn more about that process here, and through an earlier GPACE blog entry.  These are public meetings and Kansans can participate via webinar/conference call access.

Recall that Tri-State is the large, Colorado-based utility that will own almost all of the proposed Sunflower Electric Holcomb coal plant, and the electricity produced by it.  In fact, it was in response to an RFP for baseload power by Tri-State that Sunflower abandoned its already-permitted Sand Sage project to pursue a massive expansion at the Holcomb Station.  As of December 2009, Tri-State had provided direct payments to Sunflower of over $51 million, excluding what they had already spent for land and water access in Kansas.

Thank you to Tri-State Generation and Transmission for organizing these public resource planning meetings, and additional thanks to the many organizations who have partnered to bring about this important process and to make it so informative and accessible.

My name is Scott Allegrucci and I am the Executive Director of the Great Plains Alliance for Clean Energy.

Briefly, the Great Plains Alliance for Clean Energy (GPACE) is a Kansas non-profit organization formed to support a clean, secure, prosperous energy economy benefiting Kansas businesses, farms, communities, and all future Kansans.

We have coordinated grassroots education and outreach and legislative lobbying with a diverse alliance of partner organizations and communities, including private companies, other non-profit groups, student organizations at several colleges and religious congregations around Kansas.

We are here – it’s no secret – because Tri-State has looked to Kansas to locate a source of baseload electricity as part of its resource planning.

Because energy underwrites everything else, we are hopeful that Tri-State, through this process, is also considering generations of future customers and the neighbors affected by its decisions.

For nearly five years, Tri-State has been involved with a Kansas co-operative utility (Sunflower Electric) in an effort to construct the first of several large coal-burning power plants in Holcomb, Kansas.  The current project is an 895mw super-critical pulverized coal plant that would import coal from Wyoming, deliver electricity back to Colorado, and rely upon Kansas air and water for decades to come.

We think this approach is inconsistent with the historic values of our state, and – we believe – of yours.

As you discuss Tri-State’s resource planning, on behalf of Kansans now and in the future, we ask you to consider the impacts of your decisions upon our economic vitality, stewardship of our natural resources and our economy, and the need for fiscal responsibility concerning long-term energy investments.   Accordingly, we submit these issues and questions for Tri-State’s consideration and response.

They are organized into three categories with two focal points in each.  GPACE has aggregated the comments and questions of our members and other Kansans; for the purposes of this presentation, some have been edited.  Some have not.

Economic Vitality: The direct economic impacts of various fuel choices

Many of our jobs and schools in Kansas – as in Colorado – rely upon Kansas’ native resources.  Consider how much severance tax for Kansas schools, PILOT, land leases, and other revenues are lost or displaced in Kansas by increased imports of and reliance upon coal, and by consolidation of baseload capacity versus distributed generation.  Accordingly, our members wonder:

• Does the recent Xcel “switch” toward natural gas and increased renewables signal a potential move by Tri-State to push its dirtier, riskier baseload capacity out-of-state to places like Kansas?

Or more directly:

• Does Tri-State intend to externalize costs and liabilities related to its energy and fuel portfolio by sending them over the state line and out of the service area and potential Colorado regulatory oversight?

The current unit at Holcomb was built in an era of generous federal subsidies, capital availability, unknown environmental consequences and lax regulation that led to the creation of too much coal-burning capacity by the mid 1980’s.  But we know a lot more today about the impacts of these previous bad decisions.  The results have created higher utility rates; financial defaults, restructures and bankruptcies; and organizational and economic consolidation within the rural electric cooperative community.

GPACE does not want those problems to continue when the option of a new energy future can be so promising for our economy and our local natural resources.

In addition, the baseload capacity represented by the proposed 895mw project (not to mention the additional proposed units as part of the expansion) is in excess of Tri-State’s or Sunflower’s capacity needs or demand projections.  With this in mind:

• What are the likely impacts from over-production of coal-fired capacity upon the integration of wind energy and natural gas deployment in the region?

• Will an over-reliance on coal cause Kansas air quality (and related costs) to suffer more than expected under current modeling?

Economic Vitality: The transmission issue

We were interested to hear at a previous meeting in this series that Tri-State had done no significant transmission planning related to the proposed Holcomb expansion.  This seems to run completely counter to the expectations regarding the transmission outcome from the project established by communications from Sunflower Electric and allied entities in Kansas, and as codified into Kansas law subsequent to the settlement agreement between Sunflower and the Governor’s Office.  Our members ask:

• Why has Tri-State not undertaken this transmission planning?

• Does it intend to?  Is that dependent upon permit status of the proposed project?

• What is the real likelihood of a major export pathway for wind-generated electrons moving west from Kansas to and through Tri-State’s service area, across the phase shift barrier between our respective power pools, away from key renewable energy markets in the Southeast (and Kansas’s own power pool), and swimming upstream against a robust wind resource right here in Colorado?

Stewardship and Economy: The long-term impacts of changes in water and land use

Assertions have been made in Kansas that all or most of the land and/or water rights acquired to accommodate the needs of a new power plant in Holcomb are currently owned by irrigated agricultural interests, with the resulting mandatory reduction of draw-downs creating an absolute reduction in water use post coal plants.

However, we know that at least some of the project land is not irrigated, which suggests that in at least some instances there will be no ag-to-industrial water use reductions.

Coal-fired power plants draw ground water in a very different way than agricultural users, who will encounter economic barriers to water withdrawal long before an aquifer or well is depleted.  Industrial users can make that water draw pay for a much longer time, and may actually be inclined or incented to deplete the aquifer or a well.

Additionally, if local land and water is transferred from agricultural to industrial use, agricultural revenue streams will be displaced, potentially damaging local communities and economies.  We ask:

• What can Tri-State tell us about the water impacts of the project?

• Have any hydrological studies or analyses been undertaken and could those be shared with the public?

• Has Tri-State undertaken or acquired any data or analysis on the water and agricultural-related economic impacts from the project?

Stewardship and Economy: Liability and uncertainty related to carbon dioxide, mercury, and criteria pollutants

Given that Kansas would supply water and air (as a sink for emissions) for the project, our members ask:

• With regard to new coal-burning baseload, what contingencies has Tri-State adopted to address the certainty of pending carbon valuation and other regulations related to nitrous oxides, sulfur dioxide, particulate matter, and mercury?

• With regard to the economic liabilities created by pending carbon valuation, mercury, and criteria pollutants, where does Tri-State anticipate the fiscal, regulatory, and legal liability will accrue?

• What liability related to pollutants (including carbon) does Tri-State anticipate from the proposed project?

• Will those obligations be assigned according to equity ownership (i.e. the current 80-20 split indicated by Sunflower and the permit application, or will they remain solely with the permit holder (Sunflower Electric)?

• Will they follow power purchase agreements?

• What is the strategy and/or contractual agreement in place regarding the proposed project to deal with the consequences of carbon valuation, taxation, or regulation, and the fiscal impacts of other criteria pollutants?

Fiscal Responsibility: Rate impacts

As a result of the settlement agreement between Kansas Governor Parkinson and Sunflower Electric, the membership cap on rural electric co-ops triggering rate review by the Kansas Corporations Commission was lifted.

This essentially means that what may become the largest coal-fired generating station in the western United States would have no public oversight over ratepayer impact and cost recovery measures.

Recently, Kansas City Power and Light (an IOU) requested a rate increase related to its Iatan 2 project of 11.5%.  KCP&L acknowledged, “the increase in rates is required primarily to recover costs associated with the building of a new 850mw coal-fired generation facility.”

With this in mind, Kansans wonder:

• Will carbon or other emissions liabilities from Holcomb 2 be passed on to ratepayers?

• Does Tri-State anticipate rate increases related to Holcomb 2 if it comes on line?

• How does the business arrangement between Tri-State and Sunflower address rate increases?

Meanwhile back in Kansas, Sunflower has indicated that it intends to buffer its customer-owners from projected rate increases due to environmental regulation, cost overruns, fuel costs, etc., essentially, on the backs of Tri-State’s customer-owners.

• Will increased costs related to the construction of the plant, the fuel requirements of the plant, or other factors be passed on to Colorado ratepayers, Kansas ratepayers, or both?  How is that determined?

Fiscal Responsibility: The business and financial relationship

After over-building coal-burning capacity 30 years ago in the form of Holcomb 1, Sunflower Electric has been forced to restructure its debt arrangements with the Rural Utility Service of USDA three separate times.  At one point, the Sunflower Electric debt to American taxpayers was nearly $1 billion.  USDA acknowledges that taxpayers are not likely to see any return on most of that money.

The current restructuring presumes Sunflower will build multiple coal-fired units (as many as three more) at the Holcomb Station, with output far exceeding demand expectations for its service area.

Even though Sunflower’s service area sits atop one of the most prolific active natural gas fields in North America and natural gas development in this region continues to expand significantly.

And Sunflower’s service area sits in the midst of one of the densest and most consistent wind resources on the continent, with capacity factors exceeding 50% at 100 meters.

With those facts in mind, our members ask the following questions:

• Does Tri-State have any concerns regarding Sunflower’s financial situation and history?

• Has Tri-State undertaken to provide any financial assurances to creditors regarding the proposed 895mw project or its partnership with Sunflower Electric in general?

• With 30 years of unpaid and restructured taxpayer debt, does the current plan for one, two, or three additional large coal-fired units seem exceedingly risky?

• Is this a situation that Tri-State would undertake on its own, absent a partner like Sunflower?

• Has Tri-State established a maximum investment it is willing to make in Holcomb 2 with no return on the equity?

• If for any reason, Holcomb 2 is not permitted or built, what debt obligation (if any) does Sunflower have to Tri-State?

• If the project is permitted and completed, what debt obligations (if any) do Tri-State and Sunflower share?

• Can Tri-State share more detailed information regarding its financial, legal, regulatory, and operational relationship with Sunflower Electric, especially with respect to the proposed 895mw unit and related transmission infrastructure?

• Does Tri-State have or anticipate a business relationship with Sunflower Electric and the Holcomb Station expansion beyond the proposed 895mw unit?

In closing, we raise a lot of issues, and have asked a lot of questions in these remarks, but in many respects, most of our members’ concerns boil down to an absence of public information regarding critical details of the proposed project and the business arrangements that underwrite it.

We understand the nature and structure of rural electric coops vis a vis member-customer ownership and oversight.  But we also understand that rural electric coops were created by public will using public money to serve public interests.  The potential adverse economic, environmental, and health impacts from the proposed coal-fired unit and the planned expansion at the Holcomb Station would not just affect Tri-State customer-owners or Sunflower customer-owners.  Those impacts will be shared with all Kansans for generations to come.

We are grateful for this opportunity to express our concerns and to ask questions, and we hope that this public resource planning process embraces the credible, comprehensive, and accountable public dialogue that has frequently been denied us in Kansas regarding the proposed project at Holcomb.

Lee Iacocca once said: “The most successful businessman is the man who holds onto the old just as long as it is good, and grabs the new just as soon as it is better.”  Certainly this progressive spirit applies to planners and those responsible for planning for the next generations.

We at GPACE believe that at this juncture success is achieved by investing in the new energy economy that will power our future.  We further believe that the risks associated with out-dated 20^th-century technologies incurring significant additional debt and unknown additional environmental costs, are not the legacy we wish to leave our children.

We trust that Tri-State and its members, true to the long-established Colorado and Kansas values of responsibility and stewardship, believe the same.

Thank you very much for your time and for consideration of our comments.  We look forward to your responses.

GPACE will be presenting on Wednesday, May 19th at the Tri-State Generation and Transmission public resource planning meeting at Tri-State headquarters in Westminster, Colorado.

This public resource planning process that Tri-State is undergoing was brought about as part of a settlement agreement primarily involving the Colorado Public Utilities Commission, Colorado Governor Ritter’s office, Western Resource Advocates, and Tri-State, whereby an existing docket to consider PUC regulation of Tri-State was closed without action in exchange for this public resource planning process.

The process is non-binding; that is, Tri-State is not obligated to accept any of the recommendations or answer public questions, but it does provide a forum for important public information and scrutiny of Tri-State’s resource planning.

Tri-State has no member coops in Kansas, so why is the resource planning process of a Colorado-based rural electric coop of interest or importance to Kansans?

Recall that it was in response to an RFP for baseload capacity from Tri-State that Sunflower Electric (in Kansas) let their permit for the 660mw Sand Sage project expire (after the initial granting and an extension) and began the process of putting together the current plan to build three huge additional coal plants at Holcomb for out-of-state utilities.  So far as we know (the details have not been discussed since rural electric coops do not have to allow public or regulatory review of their plans) Tri-State would be the equity owner of 80% of the electric power produced by the proposed 895mw coal-fired plant at the Holcomb Station, and they would own 80% of the equity value of the plant.  Beyond that, not much is known about the details of the business arrangement between Tri-State and Sunflower regarding the proposed plant, or any future development at Holcomb.

We do know that Tri-State reps recently acknowledged in one of the public meetings that they currently have developed no transmission plans for Holcomb – which seems to be at odds with claims by Sunflower and Holcomb supporters in Kansas that the plant is critical to transmission for wind energy.  That fact is also seemingly not in compliance with the settlement agreement between the Governor and Sunflower, which calls for transmission to be built.

Tri-State is also on record stating that they do not see the Holcomb coal plant as a near term baseload solution under any circumstances, which again, is at odds with claims by Sunflower and Kansas coal supporters that the plants will start construction within a year and employ people to combat the recession.

And, Tri-State’s own load forecasts acknowledge that they do not have near-term need for the baseload capacity represented by the proposed Kansas coal plant.

Yet, their 2009 annual report shows that they have spent $51.3 million, excluding the cost of land and water rights, developing the units at Holcomb as of December 31, 2009.

So, what’s currently happening at the Tri-State public resource planning meetings (and the ultimate outcome of their resource planning process) will have a tremendous impact upon Kansans, since the fate of the proposed 895mw coal-fired plant, and the possible addition of two more huge coal plants as part of the proposed Holcomb Station expansion, may be impacted.

Even if you can’t attend the May 19th meeting near Denver, Kansans can register and participate in the public meeting via webinar here.

Scott Allegrucci

Executive Director

From the GPACE team

The same kind of reckless and unregulated behavior that derailed the nations banking system has been revealed right here in Kansas.  A legal motion filed by the Sierra Club and Earthjustice now pending in federal court does not paint a pretty picture for the electric utility currently seeking to host the first of several huge coal plants for out-of-state utilities.

Nearly thirty years ago, Sunflower Electric Power Corporation took on huge debt, funded by American taxpayers, to build a coal-fired power plant in Holcomb, Kansas.  Initially the utility predicted that the plant would act as a significant revenue source and that it would help keep rates low in the Sunflower service area.

Neither prediction came true.

By 1987, Sunflower was forced to admit the plant was generating too much electricity in a market flooded by new coal plants built in the 1980′s.  Sunflower raised electricity rates on its customer-owners in an attempt to defray costs from the under-utilized facility.  Eventually Sunflower was forced to restructure over five hundred million dollars in federal taxpayer loans on three different occasions. The company was never able to meet payment of the loans that, with interest, totaled nearly a billion dollars by 2002.

The third restructuring in 2007 might leave average Kansans scratching their heads.  Sunflower Electric and the Rural Utility Service (RUS), a federal agency that supports rural electric companies, worked out an agreement to pay off some of the debt, and forgive most of what was still owed to taxpayers.  A condition of that agreement, however, is construction of up to three more coal plants at Holcomb.  The game was on, and the rules were changed again when the RUS freed Sunflower from federal environmental review of proposed new generation facilities.

The only entity left at the table to oversee Sunflower’s gamble with our money (and our air, water, and health) was the Kansas Department of Health and the Environment (KDHE).

In an attempt to run the table and correct it’s fire-engine-red balance sheets, Sunflower initially proposed to build three new massive coal plants not for its Kansas member-customers, but for out-of-state utilities. That initial proposal was scaled back to two plants, which were then denied air-quality permits by KDHE Secretary Rod Bremby.  This ignited a political fracas that consumed two full legislative sessions and held hostage the state’s energy policy.

All for one company’s Hail Mary wager with our tax dollars.

Furthermore, in the deal brokered by Governor Parkinson last May, Sunflower won a concession that it had failed to achieve through the legislative process: Sunflower is now protected from having its rate increases and expansion plans reviewed by the Kansas Corporations Commission, leaving rate payers exposed to poor decision making and volatile rate spikes.  Because Sunflower is a co-operative electricity producer and not an investor-owned utility, there are no shareholders who must be informed of risk-and-reward potentials.

During this whole process, Sunflower representatives testified time and again before state legislative committees. They used words like “tyranny” and “civil rights” to describe the way in which the KDHE decision impacted their standing in the “free market” (they used that phrase repeatedly, too).

One can’t help but wonder in what reality their free market exists. Sunflower owes us our tax dollars and an explanation – not backroom deals and the promise of “economic development” with a wink and smile.

In a free market, if you can’t swim, you sink.

States and communities across the region are taking great strides toward a twenty-first century renewable energy economy.  Coal-plant projects across the country – even one proposed by another utility right here in Kansas – are being delayed or abandoned due to the financial risks and regulatory uncertainty associated with coal-fired generation.

There are options for powering America. There are other means to meet the relatively slow demand growth for electricity in rural parts of Kansas over the next twenty years.  And there are better ways to create jobs and economic development in a state rich with wind, natural gas, and solar resources.  Kansas could be an exporter of renewable energy – along with the goods and technology to support it.  Kansas could reduce the huge amount of coal we import, and the many millions of dollars we send to mine owners in Wyoming.

The inability of Sunflower to be in a position to capitalize on these options is no reason to ignore them.  Why should taxpayers simply trust that Sunflower will win our money back, after decades of losing it?  Sunflower Electric might light the lamps on Main Street, but by betting huge amounts of taxpayer money on risky business deals – even as it decries government regulation – it’s acting more like Wall Street.

7 in a series of 7

As the Kansas Department of Health and Environment considers the new air quality permit request for Sunflower Electric’s proposed 895mw coal-fired power plant, and before KDHE announces the schedule for public hearings, it seems like a good time to ask:  Why are we still paying attention to the whole coal plant proposal?

We’re answering this basic question in a series of seven consecutive blogs/questions.  Here’s the seventh and last one.

Well, if it’s not about the jobs, or energy needs, or exporting electricity, what is the proposed Sunflower Electric coal plant about?

Exactly.  If the proposed coal plant is not the best available way to address jobs, energy needs, or economic development, why would most Kansans support it?

In fact, most Kansans don’t support it, and neither does GPACE.

The coal plant proposal has been advanced and codified into Kansas law using misinformation.  The state has been stripped of its ability to set air quality standards that benefit all Kansans for generations to come, just to allow this one unneeded coal plant to be built.  Those actions open the door for Kansas to become the dumping ground for future coal plants that other states do not want to build or operate.

All this, while our nation struggles to rebuild our economy, create lasting jobs, assert critical leadership in the exploding renewable energy economy, and Kansas squanders its abundant native fuels, including wind and natural gas.

The coal plant project does not fundamentally address Kansas energy needs or economic opportunities.  It will be financed and owned by out-of-state utilities.  Kansas’ dwindling water will be used to make their electricity, while burning imported coal will pollute the lungs of Kansas children.  It will make Kansas more dependent upon imported fuel.  And it will expose Sunflower ratepayers and Kansas taxpayers to increased costs.

Bottom line:  The proposal allows Tri-State Generation and Transmission Association to avoid stiff (and expensive) public opposition to a coal plant in Colorado.  Sunflower Rural Electric Power Corporation in Kansas has a history of questionable risk and business management (with taxpayer bailouts to prove it).  Combine those realities with manufactured partisan political hysteria about energy production and environmental accountability, and you’ve got the current coal plant proposal.

Kansas can do better.  In fact, given economic and environmental realities, we must do better if we are to remain competitive in the world we share.

That’s what we’re fighting for.  Join us.

This is #7 of 7 questions and responses – check out the rest of this series here.