Experts debate renewable energy costs; Think tank places annual cost at $660 for residential customers
Rival assessments of Kansas’ renewable portfolio standard Thursday failed to resolve questions about the cost to consumers of a state mandate that utility companies blend more alternative energy sources into the power grid.
While a Boston think tank economist said the law stipulating 20 percent had to be derived from renewable sources by 2020 came at a cost of $660 a year for residential customers, an official with a Kansas environmental group dismissed the estimate as suspiciously inflated.
The issue is in the spotlight at the Capitol because Republicans in the House and Senate are sponsoring bills to delay or eliminate the state’s RPS requirement adopted in 2009. In recent years, companies have invested billions of dollars in Kansas wind farms to take advantage of blustery conditions on the Plains. Utility companies are drawing that power into their systems as they move closer to the goal of 15 percent by 2015 and 20 percent by 2020.
Michael Head, research economist with Beacon Hill Institute at Suffolk University, said renewable energy generation from wind, solar and other sources was less efficient and cost more than conventional coal, natural gas and nuclear options.
“In order to prop up these new industries, governments enact energy mandates to force utilities to buy electricity from renewable sources,” Head said. “But, energy prices eventually manifest themselves. These higher costs are passed to electricity consumers.”
Head, brought to Kansas by the conservative Kansas Policy Institute, said the RPS would trigger a 45 percent spike in rates by 2020, which converts to a $660 annual surge for residential customers. The cost of this alternative power would be 18.4 cents per kilowatt hour by 2020, he said, and draw 12,000 jobs away from the Kansas economy.
Dorothy Barnett, executive director of the Climate Energy Project in Hutchinson, said calculations in the year-old report by Beacon Hill Institute didn’t ring true.
“I’m suspicious of a report by an organization using model data,” she said. “Our energy costs have increased here, but not because of wind power.”
The state RPS law caps the residential cost increase attributable to the RPS to 1 percent, which would translate to $13.80 a year. The cost of wind power is alternatively estimated by utility companies at 3.5 cents per kilowatt hour, rather than 18.4 cents.
In November, the law firm of Polsinelli Shughart, in a partnership with the Kansas Energy Information Network, released an assessment indicating wind power was equivalent or less expensive than new natural gas generation stations. The wind farms also poured hundreds of millions of dollars into the pockets of rural landowners and municipal governments.
“We don’t need to guess about wind generation’s economic impacts for the state of Kansas,” said Alan Claus Anderson, of Polsinelli Shughart. “It has also been a benefit to local communities, particularly those in rural areas, and provides electricity generation diversity, economic development and an intelligent hedge against rising costs of fossil fuels.”
Topeka Rep. Annie Kuether, the ranking Democrat on the House Energy and Environment Committee and an RPS supporter, said a swift rush to undermine the renewable standard didn’t reflect the two-year process legislators completed to arrive at the energy mandate. The RPS was part of a deal to secure a state permit for a controversial coal-fired power plant, which hasn’t been built in rural southwest Kansas.
“It’s important for committee members to understand the history that brought forward the RPS,” Kuether said.
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