Energy policy issues are notoriously complex.  Seemingly small changes in a state’s energy policy can lead to wide-ranging and often unintended political, economic, and environmental consequences.  In an effort to facilitate thoughtful policy discussions about these issues in the state of Kansas, several attorneys from the Polsinelli Shughart energy practice group, Alan Claus Anderson, Britton Gibson and myself, have partnered with Dr. Scott W. White of the Kansas Energy Information Network to draft a report that relies on empirical evidence gathered from the nineteen wind farms currently in operation or under construction in the state of Kansas to estimate the true economic impact of these projects.  The text below is part of this larger report, which is available at http://www.polsinelli.com//files//upload/StudyKansasWind.pdf

In Part 1 of this series, we discussed Kansas’ unique wind resource, and in Part 2 we provided a brief history of Kansas’ wind industry.  Today, we will take a look at how technological advances and a increasingly robust transmission grid will effect Kansas’ potential for future generation.  Additional sections of this report will follow in subsequent posts.

Future Project Development

Despite the significant growth the Kansas wind industry has experienced over the past few years, the vast majority of the state’s wind resource remains untapped. This growth potential is attributable to many factors, including the fact that the wind resource in Kansas is still significantly underutilized, with a large number of potential projects sites ready to be developed.  While some of these sites simply await a buyer, some of them merely require access to sufficient transmission to move the electricity, while others require incremental improvements in wind generation technology.

Expansion of the Transmission Grid

Wind energy projects are viable only if they have access to a transmission grid that can transport the power to customers.  Historically, this has been an important factor for wind project developers looking for suitable project locations in Kansas, because the bulk of the state’s best wind resource is located in areas with limited access to transmission lines.  This issue is currently being addressed by a number of public and private entities. 

The Kansas“V-Plan,” the northern portion of the Southwest Power Pool’s (“SPP”) “Y-Plan,” is particularly noteworthy.  The “V-Plan” consists of high-voltage transmission that connects eastern and western Kansas with the dual purpose of improving electric reliability and carrying more electricity from various sources, including wind, and thus further establishing a competitive energy market in the state.  Two companies, ITC Great Plains and Prairie Wind Transmission, LLC, a joint venture between Westar Energy and Electric Transmission America, are participating in the construction of this 180-mile transmission line which is expected to be completed in 2014.  The “Y-Plan” will help support the addition of 2,500 MW of new wind generation in Kansas, Oklahoma, and the Texas panhandle.

In addition to the “V-Plan,” ITC is also developing a 210-mile high-voltage transmission line between Spearville, Kansas and Axtell, Nebraska.  Construction of this line, known as the “KETA Project” began in 2009 and is expected to be completed by the end of 2012. Once completed, the KETA Project, which was encouraged by the Kansas Electric Transmission Authority (“KETA”), will support renewable generation development by providing more potential interconnection locations and transmission capacity for renewable energy generators.

 Finally, Clean Line Energy, a private company based in Houston, Texas, is in the process of developing a significant transmission project across the state known as the “Grain Belt Express Clean Line.”  Once constructed, this privately-owned project will provide a 700-mile, 600 kV extra high voltage direct current (“HVDC”) transmission line starting in Kansas and running east through Missouri, enabling Kansas wind to be exported to serve utility customers in Missouri, Illinois, Indiana, and points farther east.  Clean Line anticipates that this project will enable approximately $7 billion of new, renewable energy projects to be built. Clean Line Energy has set 2018 as the goal for commercial operation of this new transmission line.

As Figure 4 below illustrates, these new transmission lines are located in the heart ofKansas’ most productive wind areas and provide valuable paths to market for future wind projects in those areas.

Improvements in Wind Generation Technology

 Generally speaking, wind speeds increase as turbine heights (referred to as “hub heights”) increase. Since wind speed is the single most important factor in creating electricity out of the wind, tapping into high winds is key to a successful wind project. For this reason, the most noticeable wind turbine technology improvements have focused on taller hub heights and larger rotor diameters. The combination of these improvements have led to significant increases in efficiency, which have resulted in wind farms with higher capacity factors or similar capacity factors in areas with lesser winds or lower elevations.Wind speeds have historically been measured at 50 meters for wind farm development and subsequent wind maps (such as that shown in Figure 1) reflected this. However, utility-scale wind turbine hub heights have been significantly higher than 50 meters for many years (as an example, the Gray County wind farm, built in 2001, has a hub height of 65 meters).

On average, Kansas possesses a robust wind resource at a height of 50 meters.  However, as Figure 5 below illustrates, at a height of 80 meters, roughly half the state experiences average wind speeds between 8 and 9 meters per second, which is well above the 7 to 8 meters per second commonly found at a height of 50 meters.

Given that wind speed increases with an increase in altitude, there has been a trend across the wind industry to erect turbines with taller hub heights.  As seen in Figure 6 below, over the last decade, hub heights across the country have steadily increased from an average of approximately 60 meters in 2001 to 81 meters in 2011.

As technology continues to improve, and construction costs for these towers decrease, it is probable that 100 meter hub heights will become common for wind projects in Kansas.  This trend towards taller hub heights is evidenced by the fact that, in 2011, 128 turbines were installed in the United States with hub heights of 100 meters, a sharp increase over the 17 turbines of that size installed in 2010.

As the average hub heights forKansasprojects increase from the current average of 80 meters, access to high-quality wind resources will increase and more locations inKansaswill be economically viable.  As shown in the following Figure, the wind speeds available at 100 meters are predominantly in the range of 8.5 to 9.5 meters per second.

Ultimately, the combination of an expanding transmission infrastructure and technological advancements will significantly expand the areas of the state that can support viable wind development. 

_____________________________

If you have any questions or comments about the Kansas wind industry, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com or (913)234-7416.

The Kansas Supreme Court on Friday issued a much anticipated ruling on a case involving a number of key issued for wind developers.  The case, Zimmerman v. Board of County Commissioners of Wabaunsee County, revolves around a dispute between the Board of County Commissioners of Wabaunsee County, Kansas and a group of landowners in Wabaunsee County who have entered into easement agreements to develop large-scale wind energy development systems on the landowners’ property.

Background

In order to develop a wind farm in Wabaunsee County, it is necessary to apply for a Conditional Use Permit (“CUP”) from the Wabaunsee County Board of Commissioners.  In November of 2002, the Board passed a temporary moratorium on the granting of CUPs for wind development projects in the county.  While this moratorium was in place, the Plaintiffs and the Plaintiff Intervenor entered into agreements which they contend severed the wind rights from the ownership of the underlying property and transferred the ownership of those wind rights to the Plaintiff Intervenor.

On June 28, 2004, after the wind development agreements had been entered into by the Plaintiffs and Plaintiff Intervenor, the Board amended the county zoning regulations to allow for small wind energy conversion systems (“SWECs,” essentially single turbines under 100’ in height generating less than 100 kilowatts), but outright prohibiting the placement of commercial wind energy development systems (“CWECs”) in the county. 

Procedural History

The Plaintiffs filed suit in the Wabaunsee District Court, asking that the Board’s decision be declared void and requesting damages under a number legal theories. Among the arguments made, the Plaintiffs stated the County’s actions diminished the economic value of their wind rights in their own property, and therefore amounted to a taking of their property interest in violation of their Fifth Amendment rights.  

The Plaintiffs also argued that by allowing small wind projects, but banning utility-scale projects, the County was unjustly burdening out-of-state commerce in violation of the Commerce Clause of the United States.  Ultimately, however, the District Court granted a Motion to Dismiss in favor of the Board, and the Plaintiffs and Plaintiff Intervenor appealed to the Kansas Supreme Court.

On October 30th, 2009 the Kansas Supreme Court issued a decision in favor of the Board for the majority of the issues presented, with a few notable exceptions.  Specifically, the Supreme Court decided to table the issues of whether the Board’s amendment violated the Takings Clause or the Commerce Clause of the United States Constitution.   

These issues remained tabled until October 21, 2011, when the Court issued a ruling on the Takings and Commerce Clause arguments advanced by the Plaintiffs and Plaintiff Intervenors.

The Takings Issues

The Plaintiffs’ essentially raised three legal bases for their contention that the County was unlawfully “taking” legal property interests: (1) the County violated Article 5 of the United States Constitution, which prohibits the taking of private property for public use, without just compensation; (2) the County’s action constituted an act of inverse condemnation; and (3) the County’s action constituted a violation of 42 U.S.C. § 1983.

In its October 21 Order, the Court disposes of all three of these takings arguments in one swoop.  Essentially, the Court notes that in order to prevail on a takings claim a party must first establish that a vested interest exists in the property in question.  “Vested interest” has been defined by the Court in the past as a right that “is not dependent on any future act, contingency or decision to make it more secure.” 

Here, the Court found that no such vested interests exist, as all of the Plaintiffs’ and Plaintiff Intervenors’ interests are conditioned upon the Board’s discretionary issuance of a CUP.  Thus, because there were no vested property interests, there can be no taking under any of the various legal theories advanced by the parties.

The Commerce Clause Issues

Overview of Dormant Commerce Clause

Before describing the decisions, it might first be helpful to provide an overview of Commerce Clause jurisprudence.  Article I, §8 of the U.S. Constitution (the “Commerce Clause”) grants Congress the power to regulate interstate commerce.  The “dormant” Commerce Clause refers to the prohibition, implied in the Commerce Clause, against states passing legislation that discriminates against or excessively burdens interstate commerce.

In a Dormant Commerce Clause case, a court is initially concerned with whether the law facially discriminates against out-of-state actors or has the effect of favoring in-state economic interests over out-of-state interests. If the action is facially discriminatory, it will be deemed invalid unless the County can show that it has no other means to advance a legitimate local purpose.

If the action is not facially discriminatory, the Court is much more flexible. If the law is not outright or intentionally discriminatory or protectionist, but still has some impact on interstate commerce, the court will apply a balancing test which examines whether the interstate burden outweighs the local benefits. If it does, the law is usually deemed unconstitutional.

Remand of Commerce Clause Issues

In addressing the Dormant Commerce Clause issues in this case, the Court first notes that, because the zoning regulations prohibit all CWECs in the county regardless of the connection to interstate commerce, there was no facial discrimination. 

Therefore, the Court must examine whether the burden imposed in interstate commerce is “clearly excessive in relation to the putative local benefits.”  Specifically, the Court notes that it should consider (1) the nature of the putative local benefits advanced by the County action; (2) the burden placed on interstate commerce by the statute; and (3) whether the burden is “clearly excessive” when weighed against these local putative benefits.

Here, the Court noted that because the lower courts dismissed the case without allowing discovery or an evidentiary hearing, there is not enough evidence in the record to conduct a full analysis of the benefits and burdens of the County’s actions.  Therefore, the Court reversed the District Court’s grant of the County’s Motion to Dismiss and remands the case back to the District Court for a full analysis of whether the interstate burden outweighs the local benefits.

If you have any questions about the impact of this ruling or would like any additional information about renewable project development in Kansas going forward, please feel free to leave a comment below or contact me directly at lhagedorn@polsinelli.com.

We here at Renewable Energy Law Insider would like to congratulate BP Wind Energy North America Inc. (BPWENA) on its announcement of a new 420 MW wind project located in Barber and Kingman Counties, Kansas.  The new wind project, known as Flat Ridge 2, will be located approximately 60 miles southwest of Wichita, Kansas. 

Kansas Governor Sam Brownback, an active supporter of Kansas wind, attended the announcement ceremony on October 3rd.  During his remarks, Gov. Brownback stated,

We have enjoyed working closely with BP Wind Energy to create jobs and grow the economy in our state. Kansans have a proud history of meeting the needs of the world. We export wheat to feed the hungry and will now be exporting our latest crop – clean, reliable and affordable wind energy to power the needs of our nation.

Flat Ridge 2 and BPWENA have worked diligently with the residents and government officials of these counties to ensure a positive local reception to the project.  To that end, Flat Ridge 2 has entered into payment in lieu of taxes (PILOT) agreements and road maintenance agreements (RMA) with Harper County and Kingman County, and has entered into long-term leases with area landowners for placement of all wind turbine generators necessary for successful completion of the Project.

Commercial operation of the Project is currently planned for January 1, 2013. 

For more information about this project, see BPWENA’s press release, or Daniel McCoy’s excellent article in the Wichita Business Journal, “BP announcement another step toward Brownback’s renewable vision.”

Today, I will continue my well-intentioned but perhaps ill-advised plan to provide you, my loyal readers, with state-by-state updates of recent noteworthy renewable energy stories (seriously, 50 states…what was I thinking?).   Fortunately, today’s state, Kansas, is near and dear to my heart. 

As I’m sure most of you are aware, Kansas is exceptionally windy.  NREL and AWEA have ranked Kansas’ wind resource #2 in the United States, with the potential to generate a staggering 950,000 MW annually from wind alone.  What you may not have realized is that Kansas also ranks in the top 10 states for its solar resource.  Put simply, there is a lot potential for utility-scale renewable projects in the Sunflower State.

Do you know of any Kansas-related news items that you would like me to comment upon or add to this list?  Leave a comment or send me an email at lhagedorn@polsinelli.com and I’ll be sure to add it.  With that background in mind, lets check in with what has been going on in Kansas…

New Kansas Commissioner Sworn In

Kansas Governor Sam Brownback recently named a new Commissioner, attorney Mark Sievers, to the Kansas Corporation Commission.

“Mark’s career began in public service as a police officer in Colorado Springs in 1975, and after receiving a law degree and a master’s degree in Economics, he went on to distinguish himself at the highest levels of the public and private sectors across the country. Mark will bring a wealth of training, experience and knowledge to the commission,” Governor Brownback said.

Commissioner Sievers’ prior professional experience includes time as a collegiate level professor at the Utah State University, the University of Utah and the University of California, an attorney for both large and small f irms, and a Senior Executive at Sprint, SBC, GTE, and Verizon, where he was part of the senior executive team that created Verizon, then the world’s largest merger at $56 billion, with operations in 21 countries and involving 250,000 employees.

Commissioner Sievers was sworn in on May 18, 2011, and will now join Commissioners Ward Lloyd and Thomas Wright.

Kansas Governor Brownback Announces ‘Road Map for Wind Energy Policy’

Kansas Governor Sam Brownback recently announced his “Road Map for Wind Energy Policy” for the state.  This announcement attempts to strike a balance between what Gov. Brownback refers to as the “3 E’s – the Economy, Energy, and the Environment.”  As part of this Road Map, Gov. Brownback sets forth a plan to expand an existing informal moratorium on wind development within a tallgrass prairie area in the Flint Hills region of Kansas.  Under the proposed expansion, the “Heart of the Flint Hills” moratorium will more closely track the geographic area identif ied by the USFWS as a conservation area.

The prior moratorium was established approximately seven years ago by then Governor Kathleen Sebelius to protect development in areas designated as “pristine prairie.” That moratorium was never codified in law.  

In commenting on how this expansion might affect other wind projects within the state, Gov. Brownback stated:

“I do not, however, wish to convey a negative message about the future of wind energy in our state. My administration will continue to work with wind developers and wholeheartedly support their activities in other parts of the state. The Tallgrass Heartland will not prohibit the construction of necessary electric transmission improvements. Wind farms that are currently under power purchase agreements within the protected area, are of course, expected to fulfill those contracts and will have every opportunity to renew their agreements moving forward. However, they will not be expanded.”

Kansas Corporation Commission Approves PPAs for 369 MWs of Wind Energy

On November 10, 2010, Westar Energy, Inc. and Kansas Gas and Electric Company, filed a petition with the Kansas Corporation Commission for a predetermination of the ratemaking principles and treatment that will apply to the recovery in rates of the costs to be incurred pursuant to certain power purchase agreements (PPAs) for the purchase of 369 MW of wind energy. In its petition, Westar indicated the wind farms would become operational in 2012 and proposed that the costs of the purchases under the PPAs be recovered through its Retail Energy Cost Adjustment (RECA).

On March 25, 2011, Westar, the Commission’s Staff, and the Citizen’s Utility Ratepayer Board (CURB), jointly filed a motion to approve a Stipulation and Agreement which supported adoption of Westar’s petition as filed. 

Through a Final Order issued on May 9, 2011, the Commission approved Westar’s recovery of the costs of the PPAs through its Retail Energy Cost Adjustment. In reaching this conclusion, the Commission held that it is reasonable for Westar to enter into these particular PPAs now in order to meet its obligations under the RES Act both in 2011 and in 2016 because the terms and pricing under these PPAs are favorable and execution of the PPAs now will result in benefits to Westar’s customers.

*If you enjoyed these updates, don’t forget to also check out our prior state updates on Arizona, Colorado, and Illinois.