Associated Press, via Wichita Eagle online

TOPEKA, Kan. - A western Kansas utility’s push to build a new coal-fired power plant could touch off a battle over water.

Hays-based Sunflower Electric Power Corp. estimates that its new plant in Finney County in southwest Kansas will consume 3.9 billion gallons of water a year.

Most of the electricity generated by Sunflower’s new plant initially would flow to a partner utility in Colorado. That’s leading critics to suggest Kansas will be exporting water.

Farmers who previously held the rights to the water Sunflower wants to use would have been allowed to consume significantly more water.

Eventually, the project will need a water-use permit from the Kansas Department of Agriculture.
Read more: http://www.kansas.com/2010/09/06/1480522/water-also-an-issue-with-western.html#ixzz0ylbUdYVu

The following was written by Jeff Jacobsen for his blog, Here I Stand

I can’t tell you how many times I have watched coal trains lumber across the Kansas Plains stretched out for miles like a monstrous strand of black licorice.  I’ve sat in my car or rested on my bike watching and waiting for them to pass, but, sadly, not thinking.  The time has come to do that.  Without much thought I have watched those trains and never really pondered from where that coal comes and how much damage that coal is doing to the air and water of our wondrous state.  Let’s clear the air.

All Kansans should be thinking very hard about the future of our state and coal’s role in it.  A permit for the construction of an 895 mega-watt coal plant near Holcomb in western Kansas is being considered.  A public comment phase runs through August 15.  Public hearings began Monday, August 2 in Overland Park.  Others hearings will be held in Salina on August 4 and Garden City on August 5.   The plant would be owned and operated by Sunflower Electric, but Tri-State Generation and Transmission in Colorado will have already claimed 85% of the energy for Colorado.  They have craftily done this by directing roughly $52 million to Sunflower Electric to carry on the fight for a permit.  The power would not be a revenue-generating export for Kansas and would have little effect on our bottom line.

If the Holcomb plant receives its permit, begins construction in 2016, as hoped, and goes on-line some years later, 3.4 million tons of coal would be burned every year.  That would require over 30,000 train cars annually, or one full train every day.  That is simply too much.  Estimates are that our country’s coal reserves could be in serious decline in as little as 20 years.

Coal for the plant in Holcomb would come from Wyoming.  According to the National Conference of State Legislators, Wyoming generated 803.6 million in severance revenue from the sale of coal.  By pursuing use of Kansas’ abundant natural gas resources and advancing our use of wind energy, we can stop shipping our money west.  In the process of putting more Kansans to work, we also can strengthen our economy and create better schools, libraries and overall public funding in areas we Kansans all need.

According to information from the U.S. Department of Energy’s National Renewable Energy Laboratory, 2, 700 MW of installed wind capacity at 44% capacity factor would create $7.2 million a year in direct payment to landowners, $7.8 million a year in PILOT revenue, 4,300 new jobs during construction with $508 million a year directly to local economies and 700 new permanent operation jobs generating $57 million a year.  Combine those figures with the already extensive employment that comes with the use of our natural gas, Kansas would be in the enviable position of generating all the power Kansans need and reaping the financial benefits.  These plants and wind generators could be up and running far sooner than any coal plant.

All the money involved pales though compared to the impact a move to cleaner energy would have on our state’s well being.  Coal pollutes.  Coal plants deplete our water resources.  Both contribute to the need for growing concern over our environmental future.  We cannot afford to turn our backs any longer to the realities of global warming.  A report from the Physicians for Social Responsibility has stated that coal pollutants like carbon dioxide, mercury, particulate matter and nitrous oxide will cause damaging effects on respiratory, cardiovascular and nervous systems.  The Holcomb plant would use 6,000 Olympic-sized swimming pools of water each year.  A drive through western Kansas should make anyone aware of how precious water is to the farmers and ranchers of the area.

Remember the hearings currently underway deal with the need for an air quality permit.  All the evidence given on both sides dealing with economic factors is meaningless.  That is just the barter being used to overwhelm our thought process.  Clean air is at issue right now.  There are cheaper, safer and more state beneficial options that would have immediate impacts.  None would be greater than the fact we would be assuring cleaner air for Kansans for decades to come.

In fairness, my daughter Kelly is at the forefront of this fight for clean energy with her work for the Great Plains Alliance for Clean Energy (GPACE.)  Thanks to her and others, we Kansans are becoming more and more aware of the impact a coal plant would have on our state.  Meanwhile, we continue to drag our feet over embracing cleaner and safer alternatives.  I know I’ll never again sit in my car or rest on my bike as a coal train lumbers past and not think of the impact that black matter has had on us all.

We are already deeply reliant on coal in eastern Kansas.  Sadly, those trains will keep coming.  Let’s just make sure they don’t make a stop in western Kansas.  Maybe someday they’ll just keep right on rolling through Kansas to other states not as farsighted as we can be here in Kansas.  Now that would really be a great way to clear the air.

For further information, please go to the GPACE website here.

NEWS RELEASE

CONTACT:

Michael Grimaldi or John Martellaro

Trozzolo Communications Group

816-842-8111 or mgrimaldi@trozzolo.com or jmartellaro@trozzolo.com

GPACE Lauds Added Coal Plant Comment Period

KDHE does right thing to accommodate utility’s need to fix data

TOPEKA, Kan. – Scott Allegrucci, executive director of the Great Plains Alliance for Clean Energy (www.gpace.org), issued the following statement today in response to the decision of the Kansas Department of Health and Environment to schedule a second comment period on Sunflower Electric Power Corp.’s draft air quality permit to construct a new 895-megawatt coal-burning power plant in Holcomb, Kan.:

“While it would have been preferable that Sunflower Electric Power Corp. had submitted accurately adjusted air dispersion data at the outset and thus necessitated only one comment period, the KDHE’s decision to allow additional public comment is good news for Kansas and all Kansans.

“Correctly adjusted air dispersion data is critical to a complete technical review of the project’s impact. We are grateful that KDHE will allow comments on the entire draft permit after Sunflower Electric submits revised data, since changes to one part of this complex information will impact many other aspects of air quality.

“GPACE recognizes the critical and essential role of electricity generation as a significant component of economic development and job creation in the state. What’s right for Kansas is that any major utility investment should support the state’s economy, use natural resources wisely and protect the health of citizens.

“We’re grateful that regulatory processes are in place to ensure that these objectives are met. GPACE pledges to support the work of elected officials, industry and regulators so that public policy decisions are made in the best interest of all citizens, our state and our nation.”

# # #

Note to editors:

For an informative timeline illustrating the history of the proposed Holcomb Station expansion project, visit http://rethinkrepowerks.com/

To see the KDHE’s news release about the additional comment period, visit http://www.kdheks.gov/news/web_archives/2010/07302010a.htm

By Matthew Berger of SolveClimate.com

The long-awaited draft air permit for a proposed coal-fired power plant in Kansas was released last Wednesday, starting a race against the clock that will determine whether the plant – if approved – will then also be subject to the EPA’s new rules regulating the emission of greenhouse gases that go into effect January 2nd.

The draft permit was released in response to a new application, submitted to the Kansas Department of Health and Environment (KDHE) last January by Sunflower Electric, which is hoping to build an 895 megawatt extension to their current plant in Holcomb, Kans.

Originally, they had sought permission for a 2,100 MW facility, but their air permit for that plant was denied in 2007 by KDHE. It was the first instance of a regulatory agency denying a permit for coal plant construction on the basis of the dangers of greenhouse gas pollution.

Now that the EPA has declared greenhouse gases a danger to human health and welfare and tailored rules for phasing in regulations starting in 2011, Sunflower Electric will likely face yet another hurdle in obtaining approval to break ground on the troubled, controversial coal plant that has been a focus of repeated national attention.

Four Vetos by Sibelius

The Republican-controlled Kansas legislature tried four times to circumvent the KDHE’s authority to obtain a permit for the plant, but ran into a veto from Democratic Governor Kathleen Sebelius each time. A break for Sunflower came last year when Sebelius was confirmed as the new U.S. Secretary of Health and Human Services and then-Lieutenant Governor Mark Parkinson took over. Parkinson brokered a back-room deal with Sunflower – albeit for the much smaller 895 MW plant – a week after taking office.

That was last May. Since then, the EPA has moved the ball on federal regulations, so that starting in 2011 projects with the potential to emit more than 75,000 tons of greenhouse gases a year, such as the proposed Holcomb plant, would need to include an analysis of how they would use the best available control technology, or BACT, to limit those emissions, among other requirements.

Is Sunflower taking the possibility of those rules into account?

Company spokesperson Cindy Hertle said that would be “pure speculation” because those rules are not yet in place and still the subject of some controversy.

But, she says, “We’ve always followed the rules and will continue to follow the regulations, so we will undergo whatever process they deem necessary.”

A congressional effort led by Sen. Lisa Murkowski (R-AK) had tried to strip the EPA of its authority to regulate greenhouse gases. But that effort failed last month. While other congressional measures to block EPA action might be possible, it seems increasingly likely the new rules will go into effect on schedule on Jan. 2.

A Matter of Timing

Whether the Holcomb plant will be subject to those rules, though, is a matter of timing, but time appears to be on the side of “yes”.

“It really depends on when the final permit is issued,” Mark Smith, head of the EPA’s Air Permitting and Compliance Branch for Kansas and neighboring states, told SolveClimate.

“If this permit is issued before [Jan. 2], then these particular rules would not apply. If their final permit is issued after, then they would… and we would view greenhouse gas requirements as applying to the facility, so the state would need to address those in that permit that is issued.”

It seems likely that the final permit would not be issued until after the Jan 2nd deadline. Rod Bremby, head of the KDHE recounted how the last Sunflower permit took 17 months to approve. The state sets an 18-month deadline for issuing decisions on air quality permits.

“We have no idea how long this will take but we’ll try to be as efficient as we can,” he told SolveClimate, but cautioned that “the interest appears to be higher with this permit as opposed to the last.”

This is why his agency created multiple opportunities for public comment. Those opportunities were announced with the draft air permit: a series of public hearings in Overland Park, Salina and Garden City as well as comments received by email and in writing.

The agency received 774 written and oral comments on the 2007 permit, according to KDHE spokesperson Kristi Pankratz. “We anticipate that number or greater for this comment period,” she said.

The Timeline

The timeline, then, looks like this: The 18 month clock began ticking on the day, June 30, when KDHE deemed the permit application complete. Hearings will take place on Aug. 2, 4 and 5 and the public comment period will end Aug. 15. At that point, the comments will be reviewed and responses prepared. A summary of the responses will undergo an internal review. And, finally, a final determination will be announced.

For their part, the EPA has “been working with the state and Sunflower over the past year and looking at drafts as they’re made available to us. Our role really is as an oversight agency,” said Smith, saying that Kansas is the issuer of the permit and thus the main player.

He said the EPA will provide comments just as citizens will. It will also ensure the state responds to comments and that the requirements of the Clean Air Act and state regulations are upheld.

Coal-fired plants have come under attack as out of date, inefficient and excessively polluting by environmental groups and this pressure – combined with the prospect of stricter clean air regulations – has led many proposed projects to be shelved over the past couple years. Plans for 26 were dropped in the last year alone.

But Hertle said the Holcomb plant would be a “super critical pulverized coal plant,” which means it would “burn at higher temperatures and therefore it will use less coal when in operation. Hence, it will have fewer emissions.”

Power Would Go Out of State

But environmental groups are not so sure of the desirability or benefits of the plant.

“For Sunflower’s minimal power needs, building a near 900 MW coal plant is quite possibly the most risky option for ratepayers and the environment,” said Stephanie Cole of the Kansas Sierra Club.

They have also argued that the majority of the power generated in Holcomb would be pumped across state lines to Colorado, leaving local citizens with all the pollution and little of the benefits.

At least, notes Cole, those citizens will now have the opportunity to voice such concerns.

“Citizen input was not allowed in the agreement Governor Parkinson reached with Sunflower last year, and our hope is that the public will recognize that the permit hearings are an important opportunity to have our concerns with this project considered,” she said.

From the Kansas Chapter of The Sierra Club

You may recall last year that Governor Parkinson entered into an agreement with Sunflower which attempted to allow construction of one coal plant. The good news for us is that governors don’t have the authority to grant air permits, so our fight is not over!

Sierra Club and Earthjustice petitioned the Kansas Department of Health and Environment to require Sunflower to update their permit and host public hearings to allow for citizen input – and we won. The EPA has agreed to our requests and public hearings will likely be scheduled in August. Since we were not allowed to voice concerns when Governor Parkinson entered into an agreement with Sunflower, now is our time to make our voice heard.

Sign onto our statement to demonstrate opposition to new coal plants in Kansas!

We need your help now more than ever to ensure unnecessary coal plants are not built in Kansas. In addition to the host of environmental and public health threats associated with this coal plant, Sunflower Electric remains in debt to taxpayers for their existing coal plant in Holcomb¹.

Sierra Club has opposed this misguided project from day one, and we need your help to keep dirty coal plants out of Kansas.

Add your name to our statement to put Kansas on a path to clean energy!

Sincerely,

Stephanie Cole
Kansas Sierra Club

P.S. We’ve launched a new website that is dedicated to the Sunflower coal plant. We’ll post updates, factsheets, and newslinks related to our Kansas Beyond Coal Campaign on this website. Check us out here.

[1] Learn more about Sunflower’s debt to taxpayers here: http://www.sierraclub.org/coal/ks/pr/pr2009-10-03.aspx

By John D. Montgomery and the Hutchinson News Editorial Board

Ideologues tend to get their blinders on, and politicians like to pander to their base. That explains why State Sen. Tim Huelskamp, R-Fowler, sought and won a provision in the state budget to bar use of state money for implementing federal greenhouse gas regulations.

It was a mostly pointless effort but one Huelskamp probably thought principled and one that would serve the interests of anti-environmentalism rhetoric that would please his conservative base.

It seemed like poetic justice, then, when that very budget provision appeared likely to backfire on Huelskamp, imperiling the Sunflower Electric coal power plant project so important to western Kansas and to conservative, pro-coal legislators. An Environmental Protection Agency administrator expressed concern about the language of the Huelskamp amendment, communicating to the Kansas Department of Health and Environment that if Kansas lacked authority to apply federal requirements, then the EPA could exercise its oversight authority.

In other words, an effort to block EPA regulation actually could have had the effect of inviting more. If the KDHE wasn’t going to regulate air pollution, then the EPA would be forced to do so. And with the way paved with KDHE to approve air permits for the Sunflower Electric expansion of its Holcomb power plant, having the EPA in the mix would have been a concern.

Fortunately, Gov. Mark Parkinson signed the budget bill Thursday but removed that provision along with 10 others he found objectionable or problematic.

Sunflower Electric President Earl Watkins had written to the governor, urging him to remove the budget provision. Westar Energy also wanted it removed.

Huelskamp, however, stuck to his guns, saying Kansans wanted to “combat (President Barack) Obama’s cap-and-tax proposal and resist an out-of-control EPA.”

Conservative politicians will say whatever they think their base wants to hear these days. In the process, they will take empty symbolism over real results. Same goes for trying to pass worthless state legislation to protest federal healthcare reform or saying if you get elected to Congress you will get “Obamacare” repealed.

In the case of the EPA language in the budget bill, it would have been ironic symbolism had that resulted in more, rather than less, EPA regulation and new delays to the Sunflower Electric project.

By Scott Rothschild of The Lawrence Journal World

TOPEKA — Gov. Mark Parkinson on Friday was at war again with the Kansas Chamber of Commerce.

“I find myself once again completely dismayed at the behavior of the Kansas Chamber of Commerce,” Parkinson said in a news release shortly after the Legislature adjourned the 2010 session.

On Thursday, Parkinson made a line-item veto of a provision in the state appropriations bill that would have prevented the state from spending money to enforce potential regulations on greenhouse gas emissions, which scientists have linked to climate change. The measure was authored by state Sen. Tim Huelskamp, R-Fowler, who opposes federal regulation of carbon dioxide emissions.

Parkinson said the provision would have caused a lot of problems, including the possibility that the federal Environmental Protection Agency would take over environmental regulation in Kansas. Three of the state’s largest utilities, including Westar Energy, KCP&L and Sunflower Electric, contacted Parkinson and asked that he veto the provision.

“The Huelskamp proviso was bad public policy. Therefore, I vetoed it, Parkinson said.

But the Kansas Chamber didn’t agree. Jeff Glendening, vice president of political affairs for the Kansas Chamber of Commerce, said of the veto: “We are disappointed to see the governor veto the Huelskamp EPA amendment. The real beneficiaries of today’s veto are radical environmentalists. We salute Senator Huelskamp’s efforts and thank him for offering this amendment on behalf of Kansas businesses.”

Parkinson responded, “I would expect that the Chamber would be thankful that the wishes of its members — companies which employ hundreds of Kansans, contribute to our economy and keep our lights on — were met,” he said. “But instead, they reacted with another political attack and categorized their own members, who were the ‘real beneficiaries’ of this veto, as ‘radical environmentalists.’ ”

Parkinson said the chamber’s rhetoric could hurt Kansas in recruiting business.

“Businesses expect the state chamber to be a common sense, balanced entity. Instead, it has become a partisan political machine that is counter-productive to our efforts to create jobs, grow the economy and move Kansas forward,” he said.

During the legislative session, Parkinson blasted the chamber, which opposed increasing the state sales tax.

Parkinson and a bi-partisan coalition of legislators pushed through a 1-cent increase in the state sales tax, saying it was needed to protect schools, public safety and social services.

Chamber President Kent Beisner said those who supported the tax increase “catered to the needs of those at the government trough.” At the time, Parkinson responded, saying, “It is heartbreaking to think that somebody would equate the disabled, the elderly, school children, veterans, law enforcement and the poor to pigs at a trough.”

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

By Tim Carpenter of The Topeka Capital-Journal

No employees were injured when fire erupted Wednesday morning at the Sunflower Electric Power Corp.’s coal-fueled power plant at Holcomb.

The fire in a coal crushing unit occurred after an explosion at the plant located 10 miles southwest of Garden City. A damage estimate wasn’t available from Sunflower officials, but a preliminary examination indicated a smoldering belt on coal-moving equipment was the likely source.

A proposed expansion of the coal-fired plant has been the source of political controversy for years in Kansas. Gov. Kathleen Sebelius blocked the project for two years, but her replacement, Mark Parkinson, made a deal last year with Sunflower and state legislators to allow the expansion in exchange for adoption of “green” energy policies.

Emergency personnel from Garden City responded to the plant and had the fire contained by 2 a.m.

“We are thankful that everyone is safe and want to express our gratitude to the emergency crews who worked quickly and efficiently to control the fire,” said Kyle Nelson, Sunflower’s senior vice president and chief operating officer.

The 360-megawatt utility plant was offline for annual inspections, repairs and upgrades. The explosion occurred on the north coal belt in the crusher house where work was being done to reduce dust accumulation.