Kansas governor and utility CEO announce deal on coal plant

TOPEKA, KANSAS - A western Kansas utility would be allowed to build a coal-fired power plant under a deal that would end a 19-month dispute between the governor's office and the company.

The agreement between Gov. Mark Parkinson and Sunflower Electric Power Corp. CEO Earl Watkins Jr. requires the Legislature to approve proposals backed by Parkinson to promote renewable energy.

Hays-based Sunflower initially proposed to build two coal-fired plants near the southwest Kansas town of Holcomb, in Finney County.

But the plan stalled in October 2007 when Rod Bremby, secretary of the Kansas Department of Health and Environment, denied an air-quality permit for the plants, citing potential emissions of carbon dioxide.

Legislators passed four bills clearing the way to construction, but then-Gov. Kathleen Sebelius - now the U.S. secretary of health and human services - vetoed all four.

The new agreement signed by Parkinson and Watkins allows for construction of just one coal-fired plant at the southwest Kansas site. It also includes "green" provisions, such as requiring that all utilities generate 20 percent of their electricity from renewable sources by 2020 and creating incentives for consumers to use wind- and solar-powered generators.

Sunflower also agreed to use new, cleaner technology in its coal-fired power plant and to pursue other measures to offset potential carbon-dioxide emissions, which some scientists link to global warming. The utility also promised to develop wind energy.

At the same time, Parkinson accepted a proposal from Sunflower and its allies to limit the authority of the KDHE secretary to regulate greenhouse gases such as CO2. The secretary could not impose any emissions standards that were tougher than federal standards without legislative approval first.

Parkinson had begun trying to negotiate the deal almost immediately after taking office April 28 upon Sebelius' departure for her new Cabinet post.

Parkinson said Monday the agreement could become a model for handling future coal-plant proposals in Kansas and around the nation.

"It lays the groundwork for a sound energy policy in the future," Parkinson said at a news conference with Watkins.

Key legislators quickly endorsed the agreement, suggesting the Democratic governor won't have much trouble getting a bill through the Republican-controlled Legislature.

"Hopefully we will fast-track this and get it behind us," said House Majority Leader Ray Merrick, a Stilwell Republican. "The wheels are moving."

Senators are also likely to move quickly, Majority Leader Derek Schmidt said.

"We'll deal with it as soon as it's available for action," said Schmidt, a Republican from Independence. "You're going to see very broad support for this compromise."

Watkins said construction of the power plant could begin within 18 months and would take about four years. He did not have a cost estimate.

Sunflower expects the project to create more than 1,500 jobs during construction.

The plant would have a total capacity of 895 megawatts, or enough to meet the peak demands of 448,000 households.

"It's awful easy to criticize government," Watkins said. "But I would say this is a moment of pride, where government has stepped up."

In denying the permit to Sunflower in 2007, Bremby cited the two 700-megawatt plants' potential to emit 11 million tons of CO2 per year and said the state couldn't ignore the dangers posed by global warming.

The single plant could produce 6.7 million tons of CO2 a year, but Parkinson said Sunflower agreed to steps that would offset at least 3 million tons. They include shutting down two old, oil-burning generators in nearby Garden City; expanding wind power; and building a center to use CO2 to grow algae that could also fuel the coal-fired plant.

"It is entirely possible that the carbon impact of this plant is zero or perhaps even less than zero," Parkinson said.

Tom Thompson, a lobbyist for the Sierra Club's state chapter, said his group appreciates the attempt to make the new plant carbon-neutral.

"We're just disappointed that the state's still going to be building a coal-fired power plant," he said. "That means a model for building coal plants in the rest of the country."

Many legislators had wanted to overturn Bremby's denial of Sunflower's permit because they believed he exceeded his authority. Sunflower has also been pursuing challenges in state and federal courts, but would end those actions when the agreement with Parkinson is enacted.

In the four bills Sebelius vetoed, legislators tied provisions allowing both coal-fired plants to measures promoting conservation and renewable energy.

The "green" measures required by the agreement would be stronger than the latest versions of what legislators have passed, and Parkinson said he doesn't want his initiatives watered down.

But Senate Utilities Committee Chairman Pat Apple, a Louisburg Republican, said Parkinson appears to have "a good bill."