Policy Documents

Policy Tip Sheet: Kansas Renewable Energy Mandate

January 9, 2013

Kansas Renewable Energy Mandate
January 9, 2013

Problem

In May 2009, House Bill 2369 established a renewable portfolio standard (RPS) for the state of Kansas, requiring the state's utilities to generate or purchase a percentage of their electricity from a list of eligible resources including wind, solar, small-scale hydropower, and specified biomass and waste-to-energy resources. Utilities must reach 10 percent in compliance years 2011–2015, 15 percent in compliance years 2016–2019, and 20 percent thereafter.1
If utilities fail to comply with the RPS mandates, the Kansas Corporation Commission (KCC) will assess a minimum penalty equal to twice the market value of renewable energy credits that would have been required to meet the mandate. These penalties are waived for compliance years 2011 and 2012 assuming the KCC determines the utilities are making a good-faith effort to comply.2

A joint report by the Kansas Policy Institute and Beacon Hill Institute estimates the RPS mandates will cause 2020 electricity prices to be 45 percent above baseline estimates. The report also forecasts the mandate will cost the state 12,110 jobs and $1.483 billion in real disposable income through 2020.3 

This system unfairly dictates what type of energy ratepayers must consume, forcing them to pay higher rates for more-expensive and less-reliable energy.

Policy Solution

Energy consumption is not a problem, it is a solution. There is evidence that tremendous socioeconomic benefits ensue when efficient energy systems are created through market forces. Therefore, mandating the use of energy sources that otherwise would not be economical to use may lead to an artificial expansion of that industry accompanied by the decline of other industries, all at the cost of consumers.

A repeal of the state renewable portfolio standard would lower costs for consumers and foster job creation. This would produce more long-term economic benefits for the state than the temporary and artificial "green jobs" created by this mandate.

Policy Message 

Point 1: Government should not be in the business of choosing winners and losers in the energy arena.

Point 2: It is impossible to know which energy technologies will be superior in the future, and policymakers should avoid pushing technologies to market before they are ready.

Point 3: Renewable energy is currently more expensive per kilowatt hour (kWh) than conventional fossil fuels, and those higher costs are being passed on to ratepayers. 3

Point 4: In comparison to neighboring Nebraska, Kansas energy consumers pay an additional $59.17 million a year on electricity. This is partly attributable to the mandated use of more-expensive and less-reliable renewable energy.4,5

Point 5: This is a regressive mandate that will most directly affect low-income families, who have the least capacity to absorb higher energy costs.

References

1. "Kansas Energy Facts," Institute for Energy Research. http://www.instituteforenergyresearch.org/states/kansas/

2. "Incentives/Policies for Renewables & Efficiency - Kansas," Database of State Incentives for Renewables & Efficiency (DSIRE) http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=KS07R&re=1&ee=1 

3. "The Economic Impact of the Kansas Renewable Portfolio Standard" Kansas Policy Institute http://www.kansaspolicy.org/researchcenters/budgetandspending/budgetandspendingstudies/d95311.aspx?type=view 

4. "Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011," U.S. Energy Information Administration. http://205.254.135.24/oiaf/aeo/electricity_generation.html

5. "Kansas Energy Fact Sheet," U.S. Energy Information Administration. http://www.eia.gov/state/state-energy-profiles-data.cfm?sid=KS#Prices

6. "State Energy Data System - Kansas," U.S. Energy Information Administration. http://www.eia.gov/state/seds/hf.jsp?incfile=sep_use/res/use_res_KS.html&mstate=Kansas

For more information on energy & environment policy contact: Taylor Smith, policy analyst at tsmith@heartland.org or 312/377-4000