On Monday, Barton County commissioners learned the details of a proposed transmission line that would carry wind-generated electricity from Ford County to points east. The project thrusts Barton County smack in the center of a gale-force political debate amid talk of the impending “fiscal cliff.”
On Tuesday, Republican Kansas Governor Sam Brownback voiced support for wind energy and called for the continuation of a federal tax subsidy that is keeping the industry humming. The wind tax break is set to expire Dec. 31.
The subsidy, in place since the 1990s and intended to be only temporary, allows power producers to lower their tax payments by 2.2 cents for each kilowatt-hour of electricity they produce in the first decade of a wind project. It can cut the costs of a project about 30 percent.
At a news conference Tuesday, Brownback said the booming wind development in the Sunflower State would deflate next year without the tax break.
“That shows you how dramatic the impact is,” Brownback said. “With the extension of the production tax credit there will be much more wind investment, much more wind electricity that’s produced.”
It is estimated that loss of the tax credit could cost 37,000 jobs. That’s nearly half the wind industry jobs in the United States.
Wind champion and Iowa Republican Sen. Charles Grassley said Tuesday that a one-year extension of the tax credit would cost the treasury around $4 billion or $5 billion.
A study released earlier this month by Polsinelli Shughart in partnership with the Kansas Energy Information Network noted that more than 12,000 jobs have been created because of the recent construction of 19 wind farms in Kansas. Nearly three-quarters of these jobs are permanent and tied to the operation of wind farms and support industries.
Economic benefits to landowners over the 20-year life of existing projects exceeds $273 million, and community contributions plus donation agreements exceed $208 million over the 20-year lifespan of agreements.
In a letter to Congressional leadership this past week, Iowa Governor Terry Branstad and Oregon Governor John Kitzhaber, urged Congressional leadership “…to take swift action to extend the PTC before the end of this congressional session.” Both governors, along with Brownback, are members of the Wind Energy Coalition.
“Thousands of jobs in the wind industry have already been impacted by the credit’s looming expiration and thousands more are at risk,” the governors wrote. “We urge you to take swift action to extend the PTC before the end of this congressional session.”
Not all on the
However, Brownback’s sentiments are not universally shared, not even among fellow Kansans.
“Budgeting is always about priorities, particularly so when America is already $16 trillion in debt,” said Kansas First District Congressman Tim Huelskamp, referring to the automatic spending cut/tax increases mandated if elected leaders can’t arrive at a compromise by year’s end. “Are we going hand out $12 billion – 40 percent of which would be borrowed – on propping up a private industry that should stand on its own after 20 years of massive taxpayer support?
“The time to take off the proverbial training wheels is now,” he said. “If this is a profitable industry, then they will find a way to survive without massive taxpayer subsidies. If they cannot, then they and taxpayers should not be in the business.”
Fellow Kansas Congressman Republican Mike Pompeo agrees. He calls it an “enormous government handout” despite how big the wind industry is in his state.
Closer to home
Clean Line Energy Partners based out of Houston, Texas, is developing four multi-billion-dollar power transmission lines to move wind-generated electricity. One of those is the 700-mile the Grain Belt Express and it will pass through Barton County as it stretches eastward from Ford County to Missouri, Illinois, Indiana and other areas where demand for the power is strong.
“Our position is that the PTC (power tax credit) should be renewed,” said Adar Johnson, Clean Line’s regional outreach manager. Over time, the feds could phase out the subsidy.
But now, “the industry would suffer greatly if it were eliminated this year,” she said. Some wind power companies have already cut back in anticipation of losing the credit.
“We started this company knowing full well that the PTC might not be in place when we began construction,” Johnson said. “Our project is not dependent on the credit.”
Certainly, she said, the PTC makes wind power more competitive.
According to the Polsinelli Shughart study, by averaging the results of these studies, the average cost for wind generation is $68.25 per MWh if the PTC is taken into consideration or $90.25 if it is not. This compares to the average for combined-cycle natural gas at $74.55 per MWh, conventional coal at $104.35 per MWh, and natural gas peaking facilities at $177.20 per MWh.
“This is just one thing that affects the cost of wind power,” Johnson said. Improved technology, a shift in the balance of power from traditional sources to renewable energy and other factors also have an impact.
Background on the
Grain Belt Express
The Grain Belt line will deliver 3,500 megawatts of wind energy via an overhead, high-voltage direct current transmission line at a cost of about $2 million per mile.
Clean Line is finishing its application to become a public utility through the Kansas Corporation Commission. The KCC has already garnered initial approval and now must come up with a route acceptable to regulators.
Depending on the type of poles used, there will be between four and seven per mile. They will stand about 100 feet.
In planning the path, Johnson said care is being taken to avoid population centers and environmentally sensitive areas. They also hope run parallel to existing power lines and other structures.
Easement agreements will be negotiated with landowners. The project has a 10-year tax abatement, but counties along the path will receive tax revenue from the project after that.
The Kansas project comes with 5,000 temporary constructions jobs and 500 permanent operational jobs, with some of those folks possibly coming from Barton County. There is also the possibility that some vendors might come from the county as well.
Company officials said this is the most efficient and cost effective technology to move large amounts of power over long distances due to its lower electricity losses and smaller footprint than comparable alternating current (AC) lines. The project should get regulatory approval by the end of 2014 and be completed by 2018.
Wind power is AC and converter stations are required to switch the power to DC. Such a station will be located in Ford County.
The company is privately funding the line. Future costs will be paid for by the end users of the electricity.
There will be public meetings starting in January to gather public comments on the project.
Clear Line’s other three projects run from New Mexico and Arizona to southern California, from Oklahoma and Texas to Tennessee and from Iowa to Illinois and Indiana.