A Win-Wind Situation

Polsinelli
10/1/09
8:31 AM
Page 83
OF COUNSEL
by Frank A. Caro, Jr., Shareholder, Polsinelli Shughart PC
A Win-Wind Situation
Renewable energy standards have sound policy underpinnings here.
n recent months, the Kansas Legislature and
Missouri voters each passed a renewable energy
standard (RES) that will require utilities in each
state to obtain a specified percentage of electricity
from renewable resources such as wind, solar,
biomass, geothermal or certain hydropower.
None of the advocates of an RES are claiming
that wind power can replace existing nuclear and
coal plants, but wind and renewable energy can be
an important and viable part of the electric power
portfolio for new generation sources and should
add to the quality of life in our region.
Kansas’ and Missouri’s standards will gradually
increase over time, putting the electricity industry
in both states on a path toward increased sustainability. The goal of an RES is to stimulate market
and technology development so that, ultimately,
renewable energy will be economically competitive with conventional forms of electric power.
States create RES programs because of the energy,
environmental, and economic benefits of renewable energy. Currently, 31 states, including D.C.
have an RES or other similar policy.
The policy benefits of an RES are numerous,
and as noted by the Environmental Protection
Agency (EPA), include:
-- Environmental improvement (e.g., avoided
air pollution, global climate change litigation,
waste reduction, habitat preservation, conservation of valuable natural resources);
-- Increased diversity and security of energy
supply;
-- Lower natural gas prices due to displacement
of some gas-fired generation, or a more efficient
use of natural gas due to significantly increased fuel
conversion efficiencies;
-- Reduced volatility of power prices, given
stable or non-existent fuel costs for renewables;
-- Local economic development resulting from
new jobs, taxes, and revenue associated with new
renewable capacity; and
-- Public benefits of renewable energy continue
to be recognized as electricity markets become
more competitive.
According to the American Wind Energy
Association, an RES is necessary because of the
economic imperfections facing the energy market,
which include:
-- Externalities: Fossil fuel generators can
impact air quality but do not typically have to pay
for the potential local, regional, and global damage
caused by various types of potential emissions.
I
Frank A. Caro, Jr.
Of Polsinelli Shugart, PC,
has more than 20 years
experience in the electric,
gas, and telecommunications industries, and was
previously general counsel
for the Kansas Corporation
Commission.
P | 913-451-8788
E | [email protected]
IngramsOnLine.com
Renewable energy does not pollute but, in unregulated markets, will receive no credit for the
damages they prevent.
-- Public Goods: The price stability, environmental, and economic benefits of renewable energy
resources are ones that accrue to the public at
large, not directly to the purchasing consumer. This
"free rider" phenomenon can be expected to deter
consumers from volunteering to pay a little more
for renewables since their purchase will benefit
other, non-contributing consumers as much as it
will them.
Renewable Energy Standards are sensible and
practical for our region. Kansas has some of the
best wind resources in the country (in most
studies, ranked third in the nation) and Missouri’s
wind resources are also viable. It is socially beneficial to allow Kansas and Missouri to utilize those
wind resources and develop them for use in our
region, as well as potentially export to regions to
the East and South.
Background on the Kansas RES . On May 22,
2009, Kansas Governor Mark Parkinson signed
into law the Senate Substitute for H.B. 2369, which
includes a renewable energy standard, net
metering provisions and various other energy efficiency and energy-related provisions. The Kansas
RES mandates that electric utilities (excluding
municipal utilities) obtain 10% of their energy
from renewable sources by 2011, 15% by 2016, and
20% by 2020.
B ackg ro und o n the M is so uri RES . In
November 2008, voters in Missouri enacted
Proposition C, a ballot initiative that repealed the
state’s existing voluntary renewable energy and
energy efficiency objective and replaced it with an
expanded, mandatory renewable electricity
standard of 15% by 2021. The Missouri RES
mandates that electric utilities (not including
municipal utilities and electric cooperatives) obtain
2% of their energy from renewable sources from
2011 to 2013; 5% from 2014 to 2017; 10% from
2018 to 2020; and 15% for 2021 and thereafter.
Consumers are searching for a balanced
approach for reliable electric power, renewable and
green energy, and continued low-cost electric
service. Both the Kansas and Missouri RES provisions strive for that balance. Clearly, the region
and both states should benefit from the establishment of a renewable energy industry; a
commitment and policy goal demonstrated by both
states’ recent enactment of an RES.
August 2009
INGRAM’S
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