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Kansas RPS
Remains Intact

The gloves have come off in Kansas, where a band of legislators and several anti-mandate groups are pushing to repeal the state’s renewable portfolio standard (RPS). Recently, the state Senate approved a measure to do away with the clean energy mandate, but the House ultimately rejected the effort. Nonetheless, this is not the first time Kansas’ RPS has come under attack, nor will it likely be the last.

Established in 2009, the RPS requires Kansas utilities to source 20% of their electricity from renewables by 2020, and wind industry stakeholders consider the House’s vote to protect the mandate a noteworthy victory for the sector.

Frank Costanza, executive vice president of TradeWind Energy Inc., says an RPS repeal would be “short sighted” and drive away business to nearby states. The Kansas-based developer has installed about 700 MW of wind in the state and has several other projects in development.

“A repeal of the RPS would send a chilling signal to the industry – not just developers – that Kansas doesn’t support the business,” says Costanza.

Kimberly Svaty, director of Kansas for The Wind Coalition, agrees. “The Kansas House sent a strong message that retaining a stable policy environment for all industries is critical to the future growth of the Kansas economy,” she says. “Kansas has been a leader in renewable energy development, as well as jobs from associated manufacturing, and the vote by Kansas House members was recognition of our role.”

According to the American Wind Energy Association (AWEA), Kansas has about 3 GW of wind power installed and ranks eighth in the U.S. for capacity. In 2012 alone, the state’s wind mix doubled by installing approximately 1.4 GW.

Furthermore, Kansas has a lot of potential, boasting the second highest wind resource in the nation and the ability to meet over 90 times the state’s current energy needs with wind power.

“We see a lot of our wind being exported to states well beyond Kansas, particularly to the southeast,” explains Svety. “Around 45 percent of our installed wind is exported, so I think that speaks to how good of a commodity we have to market.”

The state is also home to Siemens’ nacelle assembly plant in Hutchinson, and AWEA ranks Kansas sixth for the number of wind-related jobs, with the state supporting between 3,000 and 4,000 jobs last year. In addition, the association says Kansas wind represents $5.5 billion in capital investment and over $7.9 million in annual land lease payments.

 

Déjà vu

In 2012 and 2013, the Kansas RPS survived separate legislative assaults, but the main arguments have basically stayed the same: RPS opponents claim the mandate is uncalled for and leads to higher electricity prices, while proponents maintain that the law helps boost the state’s economy and diversify its energy portfolio.

However, Britton Gibson, an energy attorney at law firm Polsinelli PC, says this newest challenge against the mandate was swifter and more aggressive than in 2013.

For example, Gibson notes that there were many opportunities for dialogue and debate, including public comment and testimony, last year. The legislation had also gone through multiple iterations at the committee level.

This year, on the other hand, he says that after the repeal passed out of the Senate, the anti-RPS language was attached to a House bill in a way that avoided going through hearings or votes in a committee.

Furthermore, last year’s failed bill sought to weaken or cap the mandate, not eliminate the RPS completely. As Luke Hagedorn, another energy attorney at Polsinelli, says this latest measure was “much more a hatchet than a scalpel.”

Gibson and Svaty also note that the same conservative groups, including the American Legislative Exchange Council, the Heartland Institute and Americans for Prosperity (AFP), have renewed their anti-RPS push in Kansas this year. Gibson says AFP, in particular, has orchestrated a massive media blitz, having run a slew of television and radio attack ads against the mandate.

One video hosted on the group’s site says the RPS limits sources of state electricity and has led to several rate hikes. “Like Obamacare,” the ad says, “it’s another government mandate we can’t afford.”

And that’s a claim that anti-RPS groups and legislators keep making – that the mandate is costing Kansas ratepayers too much. “That argument makes a good sound bite, but it’s factually incorrect,” says Gibson. In 2013, for instance, RPS opponents often cited a report from the Beacon Hill Institute, yet Svaty charges that the study used a “formulaic system” not focused on local information and served as propaganda to repeal or alter the RPS.

However, studies from the Kansas Corporation Commission (KCC), which regulates utilities in the state, indicate that the RPS accounts for only a fraction of a cent of overall electricity rates. In fact, a recent KCC report determined the rate impact of renewable resources is about 0.21 cents/kWh, while the total retail electricity cost across the state is about 9.55 cents/kWh.

The anti-mandate groups aren’t the only ones trying to get their message out to the public and lawmakers, though. Renewable energy advocates have led a large grassroots movement in Kansas, hosting round tables across the state and releasing reports of their own.

The Wind Coalition and the Climate and Energy Project announced poll results in January showing that the majority of Kansans support renewable energy development and the RPS. The survey, which questioned 600 Kansas voters, found that 91% of respondents strongly back renewables. There is also bipartisan support for the RPS, with 82% of Democrats, 73% of Republicans and 75% of Independents favoring the law. Perhaps most interesting, though, is that two-thirds of respondents would get behind boosting the RPS, even if it led to a $1 or $2 bill increase.

According to Svaty, the poll suggests that legislators against the RPS aren’t necessarily in tune with what their constituents want.

“The support for renewable energy has only solidified and strengthened in the five years since we last did a poll about clean energy policy,” she says. “I think making that information known to lawmakers and Kansans across the state is really important. We may not have the money or the resources of some outside groups that do large media marketing campaigns, but we do have the strength of public opinion on our side.”

 

Low-hanging fruit

Citing a 2014 Polsinelli report, which was prepared in partnership with the Kansas Energy Information Network and takes into account KCC data, Gibson and Hagedorn say that all Kansas utilities have already met, or are on track to meet, their 2020 RPS requirements.

Therefore, with so little to go for the state to reach 20% renewables integration, why would Kansas legislators try to repeal the standard? Why would the anti-mandate groups lobby to kill it? In other words, what’s the point?

Well, it appears that some of the legislators are simply against government requirements. According to an AP report, state Rep. Randy Garber, R-Sabetha, said in March, “I support wind energy. What I don’t support is the mandate. I support choice, free choice.”

However, state Rep. Russ Jennings, R-Lakin, argued those seeking a repeal were “nothing more than folks who want to exercise political power. This is about wanting to have a win for the sake of having a win without considering the potential benefit all this has.”

Gibson and Hagedorn suggest that Kansas is likely a big target for the RPS opposition groups because the state is “highly conservative” and, thus, politically ripe to embrace an anti-mandate mantra.

Kansas was the last of 29 states to pass an RPS, and it could become the first to eliminate its standard. Although legislators across the U.S. attempted to repeal their clean energy laws last year, none proved successful.

“I think the goal is to have a domino effect,” says Hagedorn. “If you get the RPS repealed in one state, you open up that box, and it becomes more realistic for other states to take a hard look at their mandates.”

 

What’s next?

At press time, the Kansas RPS has so far survived each attack over the past three years, and Gibson considers the recent House decision to reject the repeal a major victory. Nevertheless, he cautions, “It’s a little premature to say the RPS is safe for another year.”

In fact, Svaty says, “It is expected that additional legislation to alter or repeal the Kansas RPS is forthcoming in the upcoming Veto Session beginning April 30, as well as in future legislative sessions.”

According to a recent Topeka Capital-Journal report, RPS supporters are preparing for the next legislative assault. State Rep. Annie Kuether, D-Topeka, warned her fellow Democratic members that some lawmakers might try to attach an RPS repeal onto a net metering bill. “If the RPS goes on it, kill it,” Kuether said. “Just like last time.”

Even if Kansas’ mandate does make it through this year unscathed, though, Svaty acknowledges that the fight will likely continue.

“The wind industry could be playing defense for several more sessions, depending on the outcome of the 2014 and 2016 elections,” she says.

 

Bill Including PTC
Goes To Senate Floor

Hope for a revival of the wind production tax credit (PTC) has been buoyed, as a two-year extension of the incentive has made its way into a newly passed Senate Finance Committee tax extenders bill. An earlier version of the bill, released by Committee Chairman Ron Wyden, D-Ore., did not include the PTC.

Sens. Charles Grassley, R-Iowa; Michael Bennet, D-Colo.; and Maria Cantwell, D-Wash., had pushed for an amendment to add the PTC extension prior to a committee markup hearing on April 3. The bill also includes a two-year extension of the investment tax credit (ITC). Both incentives expired on Dec. 31, 2013, and the legislation would extend them through Dec. 31, 2015.

The Senate Finance Committee passed the tax extenders package and has sent it to the Senate floor.

“We’re grateful to all the supporters of renewable energy on the Senate Finance Committee,” says Tom Kiernan, CEO of the American Wind Energy Association (AWEA), in a statement. He adds that the vote “provides a critical signal for our industry.”

According to AWEA, a number of senators on both sides of the aisle highlighted the success of the PTC and ITC during the hearing. Grassley spoke at length in favor of the tax credits and called arguments against their extension from Sen. Pat Toomey, R-Pa., “intellectually dishonest.”

John Thune, R-S.D., then withdrew a proposal to phase down the PTC, saying that discussion belonged in comprehensive tax reform, not the debate over the extenders package. Sen. Michael Bennet, D-Colo., called the PTC “vitally important” to his state – an incentive that is “driving not in just economic growth, but job growth and wage growth.”

Lately, loud support for PTC and ITC extensions has been prevalent among elected officials. In March, 144 Congress members signed letters urging their colleagues to act quickly to revive the incentives. Twenty-six Senate members signed the letter to Wyden, and 118 House members signed the letter to Speaker John Boehner, R-Ohio. Furthermore, President Barack Obama’s recent fiscal-year 2015 budget proposal reiterated his call for a permanent PTC.

Nonetheless, some groups had urged the Senate Finance Committee not to include the incentive extension. For example, conservative advocacy Americans for Prosperity issued the following statement on April 2: “Wind energy companies have been receiving special handouts from the Obama administration for years and still haven’t been successful. It’s time for Congress to put an end to this corporate welfare and encourage a free market in the energy industry that will lower costs for Americans across the country.”

Although the Senate Finance Committee reported out the tax extenders bill, which includes about 50 other expired provisions, the battle is likely far from over.

As David Burton, a partner at law firm Akin Gump Strauss Hauer & Feld, points out, the vote is “a first step in a long journey and unlikely on its own to create enough confidence to spur investment in the development of new projects.”

 

Lawmakers Unveil
“Victory Bonds”

U.S. Reps. Zoe Lofgren, D-Calif., and Doris Matsui, D-Calif., have introduced the Clean Energy Victory Bonds Act. According to the legislators, Clean Energy Victory Bonds are patterned after the victory bonds sold during World War II and would allow Americans to participate in the clean energy economy.

“Individual citizens helped turn the tide in World War II with victory bonds, and we can do that again for the energy and environmental challenges we face by allowing folks to invest in innovative technologies that yield a profitable return for the investor and to society,” says Lofgren.

Under the proposed legislation, the lawmakers say the U.S. Treasury Department would issue small-denomination, specifically designated bonds that are widely sold and promoted to fund and extend existing tax incentives and credits that encourage the growth of renewable energy and energy efficiency technologies. The bonds would be available for purchase by individuals for as little as $25, and the legislators say the proceeds could help create up to $50 billion in direct investment.

In addition to Lofgren and Matsui, original co-sponsors of the Clean Energy Victory Bonds Act include over a dozen Democrats from across the country.

Green America and the American Sustainable Business Council, among other groups, have endorsed the bill.

Todd Larsen, corporate responsibility division director of Green America, says, “There are currently few investment opportunities for the average investor interested in supporting the shift to a clean energy economy, so this bond fills a need for both investors and the industry.”

“From a business perspective, the Clean Energy Victory Bond makes great sense,” adds Richard Eidlin, co-founder and policy director of the American Sustainable businesses Council. “The clean energy industry has not had the steady flow of financial support that investors and businesses need to plan effectively, resulting in investors often deciding to place their investments overseas rather than in the U.S.”

 

Vermont Raises
Net Metering Cap

Vermont Gov. Peter Shumlin has signed self-generation and net-energy metering (NEM) legislation (H.702) into law. The new law raises the 4% cap utilities had been using as the limit on their NEM programs to 15% of peak load.

The legislation applies to grid-connected renewable energy generation systems smaller than 500 kW that are intended primarily to offset the customer’s own electricity. Supporters, such as Renewable Energy Vermont, say the measure will be a boon for small solar, wind and hydro energy. The politically popular measure passed by a vote of 136-8 through the Vermont House and unanimously in the Senate.

 

Legislature Rejects
LePage-Backed Bill

The Maine House and Senate voted down a governor-backed bill that would have required wind developers in the state to prove a proposed project’s economic benefits, such as job creation and lower electricity prices, before receiving regulatory approval.

As NAW reported in March, Republican Gov. Paul LePage wanted to add the requirements to the state’s Wind Energy Act of 2008. Although the administration claimed the proposal would have helped keep electricity prices low and protect Maine ratepayers, some renewable energy advocates argued that the new requirements would have created uncertainty and hindered wind development in the state.

Originally, the bill also wanted to eliminate megawatt goals of the 2008 wind energy law, but the proposal was later amended to preserve the targets. The Maine legislature’s Energy, Utilities and Technology Committee voted down the amended bill, which then moved to the House and Senate floors for debate. Following both chambers’ decisions, the bill is now officially dead.

Jeremy Payne, executive director of the Maine Renewable Energy Association, commends the state legislature for doing away with the proposal.

“It’s a victory for those who care about the development of emission-free, clean energy in Maine – environmental and business leaders and the general public came together to oppose the bills, and the House and Senate rightly sided with their constituents, knowing that the uncertainty the bill would’ve created was not in the best interest of Maine’s energy future.”

 

End Rare Earth
Restrictions: WTO

The World Trade Organization (WTO) has ruled that China has unfairly restricted its export of rare earth elements. Rare earth metals, such as neodymium, are used in permanent-magnet direct-drive generators in wind turbines.

According to the United Steelworkers (USW) union, China produces more than 95% of all rare earths, which also go into electronic products such as flat-screen televisions, smart phones, hybrid-car batteries and petroleum. Action on rare earths and tungsten emanated from a complaint filed by the USW under Section 301 of U.S. trade law in 2010. The group alleged that a broad range of Chinese predatory and protectionist policies was harming the U.S. alternative and renewable energy sector. The global trade case was brought by President Barack Obama in March 2012 and was later joined by both the European Union and Japan.

USW President Leo W. Gerard welcomes the WTO ruling. “The [U.S. Trade Representative’s] actions, now backed up by the WTO, are what trade enforcement is all about: Taking on the protectionist policies of our trading partners and fighting for U.S. jobs,” says Gerard.

U.S. Sen. Lisa Murkowski, R-Alaska, also applauds the WTO’s decision but points to what she considers a larger issue.

“While I am happy to see this ruling come out in our favor, it by no means resolves the fact that we are almost entirely dependent on a foreign nation for our supply of rare earth elements,” Murkowski says in a statement. “We can file trade complaint after trade complaint, but there is no substitute for the steps that we know we must take to reconstitute our own domestic supply chain. ”

Murkowski argues that the Critical Minerals Policy Act of 2013, which she introduced in October, would help revitalize the U.S.’ critical minerals supply chain and reduce the nation’s dependence on foreign suppliers. The bill directs the Secretary of the Interior to establish a list of minerals critical to the U.S. economy and provides a set of policies to address issues associated with their discovery, production, use and re-use. w

Policy Watch

Kansas RPS Remains Intact

 

 

 

 

 

 

 

 

 

 

 

 

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