TOPEKA – Gov. Sam Brownback and legislative leaders unveiled a plan Monday to end a state mandate that requires utility companies to get one-fifth of their power from renewable sources by 2020.
The wind industry, which had fought that idea in the past, now supports it as part of a compromise that will keep lawmakers from imposing an excise tax on wind energy production.
The plan was announced about a half-hour before a scheduled meeting of the House Energy and Environment Committee, which placed the new language into HB 2373 and approved it within an hour. The bill will now head to the House floor.
The state’s renewable portfolio standard, adopted under former Gov. Mark Parkinson, requires that utility companies receive 15 percent of their power from renewable sources now and 20 percent by 2020. The new plan changes that mandate to a goal after 2016.
The plan is framed as a compromise and is backed by both the wind industry and free-market groups. Environmentalists, however, are harshly critical of it and say it is not a true compromise.
The plan also limits property tax breaks for new wind production projects – which now are permanent – to 10 years. When new wind projects go on the tax rolls, however, they will be taxed as commercial properties rather than utilities, meaning they’ll face a lower rate than gas pipelines. Existing projects will keep their tax break.
Brownback said wind energy production has nearly tripled in the state over the past five years.
“It’s been fabulous growth,” he said Monday. “It’s been a tremendous investment in the state of Kansas in renewable energy … and this agreement today, I think, further solidifies and stabilizes the policy environment so that investment can continue in Kansas.”
He called the plan an agreement by a “broad cross-section of people.”
Americans for Prosperity and the Kansas Chamber of Commerce, groups with ties to Koch Industries, have unsuccessfully sought repeal of the mandate for renewable energy in recent years. Brownback signaled his willingness to phase it out during his re-election campaign but called for both sides to come up with a compromise.
In recent weeks, representatives from Americans for Prosperity, the chamber and the Wind Coalition, a group that represents the wind industry, met with lawmakers to work out a deal. Environmentalists were not included in those talks.
Wind industry representatives pushed back on the notion that they had been dominated in the talks.
“This isn’t bad. This is long-term tax certainty for us,” said Jeff Clark, executive director of the Wind Coalition. He said the 10-year property tax break would give wind producers certainty and keep Kansas competitive with other states, although he acknowledged “it’s a step back from what we have now.”
As part of the compromise, Republican lawmakers will not pursue a proposed excise tax that had been floated as a way to help fill the state’s budget hole. Asked what was to stop lawmakers from pursuing the tax next year if the state faces a shortfall again, Brownback said the state would not face a shortfall next year.
Sen. Rob Olson, R-Olathe, the Senate Utilities Committee chairman, said no one could predict what future Legislatures would do, noting that Senate and House members all stand for election in 2016.
Jeff Glendening, Americans for Prosperity’s state director, would not say what his group had given up as part of the compromise.
“This is about the bright spots. This is about what Kansas is achieving, and that’s a free-market energy policy,” Glendening said, calling the plan a “win-win.”
But environmental groups do not see the plan as a mutually beneficial compromise.
Zack Pistoria, spokesman for the Kansas Sierra Club, called it “a backroom deal” that does not reflect the opinion of the majority of Kansans about clean energy. He also questioned its economic sense.
“Our state is riding the brakes while other states are hitting the gas pedal – Nebraska, Oklahoma, Iowa. They’re going to have a competitive edge,” he said. “Now’s the time to double down on renewable energy, not double back.”
A release from the Sierra Club and other environmental groups noted the links between repeal advocates and Koch Industries and questioned whether these groups would hold up their end of the bargain and not pursue the excise tax on wind in the future. Mike Morgan, a lobbyist for Koch Industries, was present at the governor’s news conference.
Moti Rieber, an environmental activist from Overland Park, contended that a repeal of the renewable portfolio standard wouldn’t have passed the House and said the wind industry “decided to surrender without a shot being fired.”
Pistoria said he could not entirely fault the wind industry for seeking a compromise, explaining that the excise tax would be catastrophic. However, he said, if the renewable portfolio standard is changed to a goal, the percentage should be raised to make it a meaningful goal. Many of the utility companies are already hovering around 20 percent.
Asked why the goal wasn’t made more aspirational given the state’s current performance, Olson replied that 20 percent is the number to which all parties agreed.
Wind by the numbers
12,000: Number of jobs supported by wind industry
$8 billion: Industry’s investment in the state
21.7 percent: Share of state’s electricity generated by wind in 2014
3: Kansas’ ranking among states for percentage of wind energy for total electricity
2,967 megawatts: State’s wind energy capacity
Source: American Wind Energy Association