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Kansas Governor Signs Bill Creating Transmission Authority

Kansas Gov. Kathleen Sebelius last Monday signed into law a measure (HB 2263) that will create an electric transmission authority for the Midwest state. The move follows similar efforts to set up such authorities in a number of other states, including the Dakotas, and could spur further wind power development in Kansas.

The transmission authority will have the ability to finance or even own transmission facilities, noted Jim Ludwig, vice president of public affairs at Westar Energy, in an interview with NGI on Tuesday.

Westar worked with "several other interested persons to kind of fashion the bill for Kansas," he noted. "It was originally modeled on Wyoming legislation, where in that state they have a transmission authority."

The types of facilities that would probably be financed or potentially owned by the Kansas authority would be those built primarily for economic development purposes, Ludwig noted. These types of projects would be for transmission facilities "that might not be absolutely necessary for reliability, but may allow [for] greater development for wind generation in the state or might allow for more wholesale business -- moving power in and out of our state."

Prior to the bill's signing, the legislation drew support from the Kansas chapter of the Sierra Club. The environmental group noted that the measure would help to encourage the development of wind-generated electricity in western Kansas.

Charles Benjamin, a lobbyist for the Kansas chapter of the Sierra Club, said that the group's motivation for promoting the bill was that "the western part of the state has an enormous wind resource, but it's largely untapped because of the lack of transmission lines. We feel that the wind resource could provide additional power not only for Kansas, but could also be exported if there was a mechanism for building transmission lines."

The problem, he said, "is that the utilities won't build the transmission lines or have not so far, because they have their sources of power, which is from primarily coal and other sources of electric power and they are servicing their customers through the existing grid."

"I think in part some of the supporters of the transmission authority do see it as a way to encourage the building of wind turbines," Ludwig said. "It's not exclusively, of course, for that." He noted that Kansas ranks among "the very best states for our wind resources. We have particularly favorable wind for generating electricity, so we've got wonderful potential in the state."

A key federal production tax credit (PTC) promoting renewables is due to expire at the end of this year. Benjamin commented on how much of an impact there would be on wind power development in the western part of Kansas if the PTC isn't renewed.

"Obviously, it would be helpful if it was renewed," he noted. "But what we're seeing is a trend toward bigger and more efficient wind turbines. There is some expectation that the next generation of wind turbines will be 3 MW machines and that they may be so efficient that they can produce electricity under two cents a kilowatt hour, without a production tax credit."

Benjamin noted that "these are enormous machines. They would be 450 feet high. Now, in some parts of the United States, there would be [an] objection to having machines that high, but in the western part of the state it's largely unpopulated and fairly flat," he told NGI. He said that if a trend towards fewer, but bigger and more efficient wind power machines occurs in western Kansas, "it may not be dependent on the renewal of the tax credit."

Kansas also has a property tax exemption for wind turbines. "And that's an enormous help," Benjamin said. "This is what the wind companies tell us. Also, the governor has proposed a state tax credit that would kick in should the federal tax expire. Right now, that is stuck in the legislature....but we think that could be helpful as well."

Sebelius earlier this year said that electric utilities in Kansas should have a total of at least 1,000 MW of renewable energy capacity installed in the state by 2015, which would amount to about 10% of the state's current total electric generation capacity and is more than nine times the current amount.

If anyone knows the history of the Kansas transmission siting authority, it's Benjamin. "This bill originated, actually, with me," he said this week. He suggested the idea of a transmission authority in a conversation with the now-deceased chair of the Kansas Senate Utilities Committee -- Stan Clark -- in March 2004.

Clark was killed in an auto accident that same year. Benjamin subsequently pursued the idea of a transmission authority with Kansas State Rep. Carl Holmes, "who decided that he was going to promote this idea."

As for next steps for the Kansas electric transmission authority, Ludwig noted that the "authority itself will have to be populated. The bill establishes people who will be appointed to the authority and there are certain qualifications that I'm sure they'll want -- some knowledge of the industry." He thinks that it will "probably take some time to constitute" the authority.

"With respect to owning [transmission lines], that's a big step. I would think that would be down the road, if it ever occurred," the Westar official said. "With respect to financing, the state has significant financing authority, but we're like any other state -- there's quite a line of entities who'd like to borrow money for all sorts of purposes."

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