Heartland Institute Pushes Flawed Analysis Attacking Kansas RPS

Yesterday, the Kansas Senate voted 25-15 to repeal the state's renewable portfolio standard (RPS). The measure may be discussed during a session of the Kansas House of Representatives today. Update: The Kansas House of Representatives rejected the measure to repeal the state's RPS. 

The fossil fuel-funded Heartland Institute has been using flawed analysis to inflate the cost of RPS, in an attempt to eliminate pro-clean energy laws in states across the country. Kansas’ renewable portfolio standard has not led to the huge increases in electricity prices claimed by Heartland Institute, but has led to billions of dollars of investment in wind power and created thousands of jobs.

Heartland Institute’s James Taylor claims that because electricity prices in Kansas have risen faster than the national average since 2009, the state’s RPS is causing a spike in electricity prices. But Taylor ignores the fact that electricity prices are changing based on a number of different factors. 

In reality, Kansas uses much less natural gas (see Kansas Electricity Profile Table 5) than the national average (see United States Electricity Profile Table 5), which likely impacted the faster rise in electricity prices over the past few years. 

Since 2009, the low price of natural gas due to the fracking boom in the United States led to decreased rise in electricity rates around in country - especially in states that use natural gas for electricity generation. The average residential price for natural gas dropped from $12.14 per thousand cubic feet in 2009 to $10.33 per thousand cubic feet in 2013, a decrease of 14.9%. The average price of natural gas for industrial and commercial use also dropped significantly.

In 2010, Kansas used natural gas for only 4.8% of electricity generated and coal for 67.8%. Nationwide, the electric power industry used natural gas for 23.9% of electricity generated, which explains, in part, why Kansas saw a more dramatic increase in electricity rates than the rest of the country. The low price for natural gas contributed to cheaper electricity prices and states utilizing natural gas for electricity generation saw less of an increase in electricity prices, at least in part because of abundant natural gas. 

Furthermore, from 2009-2011, the average cost of coal in dollars per short ton (see Prices back to 1949) increased 7.5% in the United States, much faster than the 2.4% average electricity price increase cited by Taylor. Kansas uses more coal for electricity generation which also resulted in an increased rise of electricity prices in the state.

Utility Data Show Minimal Impact

Utilities in Kansas have asked for electricity rate hikes, not to pay for the RPS, but because of their need to upgrade or retrofit coal fired power plants, and build new transmission capacity.

According to the Kansas Corporation Commission (KCC), Kansas City Power & Light reported less than a 1% rate increase due to the RPS in 2012 and Westar Energy estimated a rate impact of 1.7%. In a 2013 report (.PDF) to Governor Brownback and members of the state legislature, the Kansas Corporation Commission calculated the rate impact of the RPS at about 0.16 cents per kWh if the approximately 9.2 cents per kWh retail electricity cost in 2012 across the state (or less than 2% of the revenue requirement while supplying more than 10% of generation capacity). 

Finally, the KCC has submitted an annual report on each utility’s efforts to fulfill the RPS requirements and as of 2012, six of the affected utilities had already produced a surplus of clean energy in meeting the requirement. As detailed in the report:

As the Table above illustrates, all Kansas utilities currently have enough renewable generation in their portfolios to satisfy the RPS through 2015, with most possessing far more renewable generation than is required. Additionally, all Kansas utilities currently have more than enough renewable generation in their portfolios to satisfy the 15 percent threshold that will take effect from 2016 through 2019. Finally, based solely on the projects that have been constructed or announced to-date, only Westar requires any additional renewable generation to fully satisfy their 2020 requirements, and its shortfall is approximately 90 MW, or the equivalent of a less than half of an average Kansas wind project. 

Fossil Fuel Interests Attack Clean Energy Law Driving Investment, Jobs in Kansas

With the RPS being met without a major impact on electricity rates by Kansas utilities, why is there such a big push to repeal the state’s RPS?

For one, it would give the American Legislative Exchange Council and its fossil fuel membership some momentum to push for RPS repeals in other states across the country. A goal that ALEC’s energy task force stated for the 2013 legislative cycle, but failed to execute in all 15 states it attempted to repeal clean energy laws. 

Koch Industries, a major fossil rule conglomerate that has interests in electricity markets through its coal and natural gas holdings, is pushing for RPS repeal through the Koch Brothers’ funded group, Americans for Prosperity. And the Kansas Chamber of Commerce, which counts many fossil fuel and utility interests as members, is also pushing for repeal of the clean energy law. The Chamber was ridiculed by the Red State Renewable Alliance for blaming rising rates on the RPS, even though Kansas City Power & Light announced that purchasing 400 MW of wind would lower rates $600 million over 20 years. 

Kansas Chamber of Commerce has numerous fossil fuel and utility interests besides Koch Industries that could benefit from repeal of the RPS:

  • Kansas Gas Service (part of ONE Gas)
  • Murfin Drilling Company
  • Black Hills Energy
  • TransCanada
  • Westar Energy
  • Kansas City Power & Light
  • Atmos Energy
  • CVR Energy
  • National Cooperative Refinery Association

Fossil fuel interests and their front groups are trying to eliminate pro-clean energy policies because of the threat cheap, clean energy poses to the fossil fuel electricity sector. Kansas’ renewable portfolio standard has spurred investment in Kansas’ clean energy economy, driving over $7 billion in investment since 2001. In total, more than 10,000 jobs have been created by the wind industry in Kansas, both directly and indirectly according to a recent report studying the economic impact of wind energy in Kansas.

The latest effort to repeal the RPS in Kansas using flawed analysis from the Heartland Institute should be rejected by the state legislature. 

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