EnergyBiz - January/February 2008 - (Page 11) Let us build sunfloweR pRoJects neeDeD By eARl wAtkins EDiTOr’s nOTE Earl Watkins heads Sunflower Electric Power Corp., which has proposed building two coal-fired generation plans in Kansas. EnergyBiz invited him to respond to the same questions posed to Gov. Sebelius. He responded as follows. POINT COUNTERPOINT clim aTe ch a nge h as become one oF The most discussed subjects in our society. Many questions need to be answered. If the United States makes the wrong choices, our economy will be burdened with unnecessary costs that will reduce our competitive position in the world. Some states, impatient for federal action, are stepping forward with plans to solve what is a global issue. If this continues, a hodgepodge of laws will surely inhibit public utility efforts to sensibly plan for their future generation requirements. The Kansas Department of Health and Environment recently denied the air permit for our two new coal plants because of concerns about the “substantial endangerment” carbon dioxide will bring to Kansans. The decision was reached without regulatory authority and was a conclusion derived in opposition to the approval recommended by the agency’s professional staff. Demand for electricity in Kansas is increasing, especially in rural areas as renewable fuels plants continue to expand. The Department of Energy predicts electric demand will increase by 45 percent by 2030. Kansas will consume its share of this new demand, but we must use coal or risk losing our share of future economic opportunities. Sunflower’s resources consist of 53 percent coal, but all our generators are between 25 and 45 years old. By 2019, coal will only represent 36 percent of that fleet, so a policy of “no coal” in Kansas will result in a predicted 55 percent increase in wholesale electric rates. Policymakers must support initiatives that are innovative and protect the environment if we are to provide low-cost power to consumers. America has one-third of the world’s coal reserves. It would be economically and environmentally foolish to rely on more expensive fuels rather than use innovation to build cleaner, coal-based resources. With an awareness of the concern about carbon, Sunflower and Kansas State University are working to add value, rather than sequestering carbon. Our integrated bioenergy center will grow algae that will consume 40 percent of our carbon emissions to produce ethanol, biodiesel, and livestock feed. Once in commercial operation, this renewable fuels facility will make coal as CO2 efficient as natural gas. Utilities are also rapidly increasing their use of the Kansas wind. In fact, Sunflower will soon have 10 percent of its peak demand requirement served by wind – three years ahead of the state’s goal. For wind development to continue, new transmission lines must be built to move power throughout the region. However, unless baseload plants are constructed, the financial reality is that new transmission lines will not be built just to serve wind Earl Watkins phOTO cOurTEsy OF Marvin BiTTEL phOTOgraphy turbines that only generate power one-third of the time. Wind will always be an intermittent resource and is best used as an alternative to other power sources. If coal plants are not built to serve baseload needs, higher-priced gas plants will take coal’s place, limiting the amount of resources available to follow the wind. The recent permit denial will have a detrimental effect not only on coal-based energy, but also on economic development. In Kansas City, a nationwide relocation expert told a group of local chamber of commerce leaders that Kansas has a “black mark” on it as a result of the recent decision. At a recent meeting of legislative leaders, an executive from a renewable fuels development company reported its Wall Street investors had decided they would not make further investments in Kansas as long as the current uncertainty in the regulatory climate exists. The entire utility sector should be concerned about this decision. If not overturned by the courts or the Kansas legislature, utilities across the country will be forced to choose higher-cost alternatives rather than coal. Tremendous improvements in coal technology have been made in the last 25 years. While Kansas may only be a small, Midwestern state, this decision may result in policies that will harm all utilities and their ratepayers unless it is rejected in both the courts and in Congress. Earl Watkins is Sunflower Electric Power Corp. president and chief executive officer. www.energycentral.com E n E rgyB i z 11 http://www.energycentral.com
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