In a significant setback for the renewable energy industry, Kansas Gov. Sam Brownback (R) signed a law rescinding the state’s renewable energy mandates and replacing them with strictly voluntary goals.
In the past decade, 29 states and the District of Columbia adopted mandates requiring electricity providers to use renewable energy sources for specified percentages of their power production. Kansas enacted its mandate in 2009, requiring investor-owned utilities and electric cooperatives to provide at least 15 percent of their electricity from renewable sources. The mandate rises to 20 percent in 2020.
The wind industry initially opposed the legislation but eventually ceased fighting the change in exchange for lawmakers withdrawing a proposed excise tax on wind energy production.
Putting Best Face on Defeat
The new law also repealed a lifetime property tax exemption for wind producers, replacing it with a 10-year exemption for new facilities. To soften the blow, when the 10-year exemption lapses, wind projects will be taxed at the lower rate designed for commercial properties rather than as utilities.
The wind industry put its best face on the compromise.
“This isn’t bad,” Jeff Clark, executive director of the Wind Coalition told the Kansas City Star on May 4. “This is long-term tax security for us.”
Clark says the 10-year property tax break gives his industry certainty and will keep renewable energy in Kansas competitive with other states, though he acknowledged, “It’s a step back from where we are now.”
A recent study by researchers at Utah State University concerning the economic costs Kansas’ renewable energy mandates would impose on the state’s economy informed negotiations over the mandates.
The study found, “Kansas electricity rate payers will face $171 million in elevated electricity costs beyond what they would have paid in the absence of [renewable mandates]. In addition, [renewable mandates] will cause … the loss of 795 jobs, a decrease in investment of $14 million, and a decrease in personal disposable income of $72 million in 2020 alone.”
“Virtually all of Kansas’ renewable energy is being provided by wind power,” said James Taylor, senior fellow for environment and energy policy at The Heartland Institute, which publishes Environment & Climate News. “Federal government data show wind power is substantially more expensive than coal, natural gas, and nuclear energy. That is why the wind power industry cannot exist in its current form without laws forcing consumers to purchase its product. The economic pain of Kansas’ wind power mandate is evident in the state’s electricity prices, which rose eight times faster than the national average between 2009 and 2013, coinciding with the substantial increase in wind power generation in Kansas.
“Repealing the state’s renewable power mandate will benefit every consumer in Kansas,” Taylor said.
Bonner R. Cohen, Ph. D. ([email protected]) is a senior fellow at the National Center for Public Policy Research.
Randy Simmons, Ryan Yonk, Tyler Brough, Ken Sim, and Jacob Fishbeck, “Renewable Portfolio Standards: Kansas,” March 10, 2015: https://heartland.org/policy-documents/renewable-portfolio-standards-kansas