State Energy Resources Coordination Council
October 15, 2003
KCC, Topeka, Kansas
SERCC Chair Lee Allison called the meeting to order at 10:10 a.m.
Present: Lee Allison, Colin Hansen, Alex Silver, Donna Johnson,
Michael Volker, Shari Wilson, Dave Phelps, Larry Holloway (Moline),
Lee Gerhard, Liz Brosius, David Springe, Spencer Depew, Galen Menard,
Dave Holthaus, Barry Hart, Richard Nelson, Kyle Wetzel, Jesse McCurry,
Patty Clark, M. L. Korphage, Greg Krissek, Jim Ploger, Ron Gaches,
Kansas Wind and Biomass Energy ’03
Donna Johnson gave an update on the Wind and Biomass conference held
Sept. 29 and 30 in Wichita.
Johnson: It was a very successful conference with over 300 attendees,
and had better sponsorship than before, with the number of exhibitors
up. Next year it will be the Kansas Renewable Energy conference and
will be held in Topeka.
Natural Gas Summit
Allison: About half of the council was in attendance. The Summit was
put together at the request of the Governor. Liz will report on the
Brosius: It was a very successful day, with 150 attendees. The morning
session gave background information on natural gas both nationally and
in the state. We were asked to put on the Summit by the Governor
because of concern of a shortage of natural gas and also high prices,
coming into winter. The morning sessions laid the groundwork for the
afternoon. The reports being distributed today summarize the
recommendations that came out of the summit. The second step is for
SERCC to produce a report of recommendations. The moderators did a
great job of capturing the information. In your breakout sessions
today, I would like for you to go through the list of recommendations
and if you see anything that we can be acting on in the short term. It
could be communication to legislators, before the energy plan is out,
we want to include that in the Natural Gas Summit report. We have
promised to do that, identify what the council feels are important
enough or timely enough. The third item that we need help with is how
best to distribute the report. We need some feedback on what the
report would look like – a summary of the natural gas situation, both
at the national and state levels. The reports would focus in on the
recommendations from the breakout groups. We should highlight what the
council would want to go forward with. We are thinking of doing a
report similar to the energy plan. The report would be print on
demand, with a PDF on the website. We’ll communicate to the public
that the report is available online.
Allison: Look at what are the recommendations, how timely are they,
who do they go to, how many are specific enough, need to do this in
your breakout sessions. Longer term they may be part of the plan. We
could do a cover letter to targeted groups.
Hansen: Our group did a lot of brainstorming, but never got to the
recommendations. There is a lot of things in there that the council
can filter out.
Allison: Liz has done a great job of putting this together, hasn’t had
a lot of time. We had great sponsorships for the Summit and a lot of
participation on the organizing committee. We received great
compliments from Patty Morrison from the Dept. of Interior, and Paul
Wilkinson from the American Gas Association on how the meeting was run
and organized. They are eager to hear what comes out of this meeting.
Brosius: We also had tremendous support from KCC staff.
Silver: [comment on one of the listed recommendations] Is there any
way to come up with a different acronym for Kansas Renewable Resources
Action Plan (KRRAP)?
Allison: We have copies here of some of the news articles on the wind
conference and the gas summit recognizing SERCC.
Allison: A Blackout Roundtable was held October 3 here at KCC and was
called by Rep. Carl Holmes.
Alison gave information on what SERCC is doing related to the recent
blackout, and the Transmission Task Force.
Allison: Earnie Lehman, COO of Midwest Energy serves as chair of the
Transmission Task Force; there are seven other members, and they have
had one meeting. The Transmission Task Force has the charge, and
timetable. They will report to us on November 19 to inform us of how
large the issues are. They will have short-term recommendations. We
will post the timetable and charge on the SERCC website.
Holloway: The upcoming meetings of the Transmission Task Force are
Oct. 23, Nov. 4, and Dec. 14, all here at KCC.
Ad hoc Committee on System Benefit Charges
Allison: Michael Volker will give us an update on the ad hoc committee
(on systems benefit charge).
Volker distributed a brief report. He said the group agreed on a
definition of a system benefit charge as “a volumetric charge assessed
on the end-use customer’s bill to fund energy-related activities in a
manner beneficial to Kansas.” The report also summarized fuel types
and criteria to be considered and outlined some next steps.
Nelson: Dollars add up pretty quick.
Brosius: I am curious about the consensus of your group.
Volker: There were some good concerns brought up; no one was
completely against the idea. Kansas has some areas that it has
Hart: Is there any talk on issues that other states have found like
granting users over a certain age group or income level exemption?
Volker: Yes, we haven’t gotten that far, but yes, that would be
included in criteria.
Holloway: It may apply to one utility service, but maybe not to
Concern: If we have half an idea out there, we don’t want to have it
grabbed and put in legislation. Do you think you will have ready by
the time the energy plan comes out?
Volker: We don’t know that.
Springe: I am very leery of how we go through this process. It will
take some time to get it nailed down, will need coordination, we won’t
have it done by the legislative session.
Silver: An alternative to that is to delay it another year. That would
delay funding of valid programs.
Holloway: I would like to hear how you are going to tie it down by the
Springe: If we come to a consensus on the idea, and the Council
supports it, it could then get expanded by the legislature.
Phelps: Have you developed a vision? Do you have a sense of social
Volker: That is next. We only met for one hour.
Phelps: The Council will have to have consensus on this.
Allison: Difference between a systems benefit charge, public benefit
charge? Is there a distinction?
Springe: May end up with both, hits consumers pretty hard, not saying
it’s a bad thing, but there has to be some awareness of the impact on
Ploger: I have copies of report - energy programs consortium; did
white paper on this issue. Summarizes the 13-15 states that have this
system. Dozen ways of doing it, lists potential menu of items that
Allison: I applaud you for getting that report done. Good reference
Volker: We had a conversation on green tags – renewable energy credits
– instead of having renewable portfolio standards, gives credits for
purchasing green power or in the case of a utility can sell. Could be
revenue for state, offset high cost of generation. Can market
renewable generations even if not being delivered to KS consumers.
Holloway: Who buys and for what purpose?
Volker: For a green credit program.
Holloway: Being purchased anywhere where retail competition?
Volker: Don’t know that.
Volker: Had some things handed to me yesterday, a report from Stanford
University – EMF – Energy Modeling Forum, Natural Gas, North American
Energy Markets. Have not yet looked at them yet. It seems that these
reports are counter to the doom and gloom we have been hearing.
Allison: Maybe we will put on our website.
Bio-Energy Working Group
Allison: I have asked Patty Clark from Commerce to give us an update
on the Bio-Energy Working Group.
Clark: This was talked about at the Prosperity Summit – Since coming
to this position April 1st we have had 7 ethanol proposals, but
couldn’t fund them all. This is the trend. We had a question on how to
make renewables a part of the economic development for KS. The group
has had one meeting, wind energy is a classic example of energy
policy. Flint Hills wind development, need to get to what we
incentivize. Prosperity summit – had 7 across the state – kept hearing
that there needs to be a state energy policy. Troy [Findley] has been
asked to head up and Patty to assist in putting together state energy
policy. Thought is as that a group we need a list of all energy
producers in state and do side by side comparison. Dept of Commerce is
working with groups to develop state energy policy.
Allison: Who are the members?
Clark: Ever growing – have been other renewable energy groups at work
on similar issues. Haven’t ever been pulled together in one place.
Bruce Snead, Richard Nelson, corn growers, Troy Findley . . .
Holloway: Comparison needed is jobs?
Clark: No, issues impact factors needed to do comparisons, jobs is
just one of the issues. Economic standpoint, economic overlay.
Allison: I’m intrigued about how we can work with your group. We don’t
want to duplicate energy efforts as we both have limited resources.
Allison asked the renewables committee to look at and report back this
Comments from Troy Findley, Governor’s Office
Findley: As you may know, I work for Gov. Sebelius as a legislative
liaison. Want to thank each of you for serving on council, incredible
what you have done in short time. Give credit to Lee and Liz. Summit
was successful day and good event.
Will talk about governor’s plan for new executive order and some other
big picture plans. Governor’s message was to use SERCC. Currently,
there’s no single entity that crafts energy policy in the state. We
hope to change that, use this council, which has expertise and wide
representation of stake holders, to craft energy policy, move forward
to legislature, or through KCC. How do we accomplish this?
The executive order needs to be looked at and retooled. Do we have
appropriate members? Right stakeholders? I invite your input. Another
question: what is the mission and charge of the energy council? Do we
need to redefine? Make it more of an ongoing process to develop
Minor point: Some in the office want to change the name of the
Council. Invite ideas to simplify the name. Have met a number of you
over course of the year. Will use SERCC as think tank, use as a body
to make recommendations, view, review other ideas. Pass your way with
topics that we need feedback on. I want everyone to understand that
this body should be instrumental in developing policy.
One question is about the executive order – we will wait until first
of year to redo order and will look at who the members will be. The
state geologist and director of the survey will continue to be
involved as well as the chair of KCC. Gov. has great deal of interest
in council. No decisions made yet on members.
How do we expect council to operate without a budget? We’re very well
aware of that issue. Will have more support. Invite questions.
Springe: Every week I learn of a new task force or working group,
amazed that we keep having new groups. Who is coordinating the
different groups that seem to be looking at the same issues?
Findley: No, there is no coordination, part of problem we see. Hope is
that with re-issuance of executive order, we might be able to fold
other organizations into energy council. Our office worked very hard
first part of year to break down barriers between agencies. Hope to
Nelson: Regarding the makeup of members—some of us spent a lot of time
marking up the current order, what happened to those?
Findley: They are being considered. Looking for best people to make
recommendations on energy policy.
Holloway: Think about the impacts on agencies when these
recommendations come in.
Allison: Success we have is because of this tight group—formal members
and the renewables. Team efforts, Liz, KCC staff, key reason for
Allison: We have one other item under reports on the agenda, FutureGen,
something I came across just recently. See what some of you know about
it. The Dept. of Energy wants to build $1B zero-emission power plant.
DOE willing to put up 80% of cost of putting up coal-fired plant.
Soliciting coal producers and electrical companies to propose
location. Looking for site. KS as a state has not done anything to
pursue this. See what role we might want to play, put together
something from the state, be involved.
Allison distributed the notice from the Federal Register.
Allison: KS has certain aspects that could be very competitive. The
Survey is just getting ready to start a CO2 flooding project in
western KS. Oil industry may buy CO2 from plant. Would be a 1M tons of
CO2 a year. We may have technical advantages.
Hart: This is the first time I’ve heard about this. Maybe this group
should send a letter to Governor, see if KS can do. Have a lot of
people in state involved in this issue, Brownback, Roberts, etc.
Gerhard: As background, I might mention that the State of Kansas
competed for the superconducting supercollider.
Nelson: Carr led proposal, not funded, going to meet with someone.
Allison mentioned communication with Moran’s office. Said DOE was
going to give him a briefing on where this stands. They want one
consortium. We may contact KS utilities about joining consortium.
Holloway: Best way might be get support from public power folks; other
thing is to get rid of CO2, where needed in state.
Allison: We (KGS) have been doing those studies; we are going to start
pumping within a month. I ask the committees to talk about this in
your meetings this afternoon. See how the council wants to proceed. It
appears we don’t have anyone in the state involved with this.
Hart: Other issue – you view as large ongoing development project,
resources should be put on as priority basis.
Johnson: Having worked for DOE for a time, looking at some of this
stuff, it needs to be industry driven.
Allison: Trying to get a sense is if there is someone already so far
out in front. So far I’m not getting a good answer from anyone. What
are the three states you see?
Silver: Pennsylvania, Wyoming, and N. Dakota, from fuel point of view.
Electric energy from coal would be the Northeast, ours from coal.
Would expect to be in high-density population areas. Can make some
Hart: Bush announced this program, Roberts and Brownback should be
able to see where this process is.
Allison: When I talked with their offices, they were not aware. I’m
trying to get information from DOE. Big question is: is there already
a consortium, and what is happening, worthwhile to put effort into
Allison: We were to talk about what the sector committees are to do
this afternoon. The November 19 meeting is to prioritize our
recommendations. Today I’d like you to determine which items in your
sector are your priorities, key issues, so that the other committees
will have a month to consider. Next month we will vote on the
Brosius: We have had multiple discussions on how the report should
look. Will look to Volker and Holloway for forecasts. Will also ask
Tim Carr for info.
Lunch break at 11:50
Sector committees will meet at 12:30
Full council reconvened at 2:25 p.m.
Allison: Next meeting – November 19 at McPherson, short tour of
Allison asked for the reports from the sector committees; said that
their proposed recommendations will be sent out as a list for
prioritization and vote at next meeting.
Silver [Renewables Committee]: Our primary action item to present to
legislature is for a System Benefit Charge , completely undefined. We
need to find way to finance SERCC activities, do in January for time
for legislature to act.
Suggest we make effort to coordinate interests so we’re not
duplicating efforts in state.
- Conservation issue, endorsement
- Education issue
- Transmission, important for state for energy in general, continue to
support task force
- RPS – define RPS, green tags, or renewable energy credits, warrants
- Roadmap for renewables in the state and as a committee develop
renewables towards less dependence on important resources.
Allison: Ploger is working on a chart that shows different energy
programs and agencies in state.
Depew [Petroleum committee]: We had 6 recommendations:
- Help with addressing national issues. Get state help, active
- Raise exemption levels.
- Tax exempt for technology across energy spectrum. “Advance
technology tax exemption.” Be independent of product price.
- Recommend modification of oil unitization statute for multiple
- Amend Article 9 of the Uniform Commercial Code to restore a
preferred creditor position for sellers of oil and gas upon bankruptcy
of the purchaser.
- Move the coal bed methane tax exemption beyond the 2 year
exemption. “Favorable tax treatment.”
Menard said he would like to write a paragraph on addressing the
national issues. Has to do with jobs and refineries.
Depew: Exemption levels – the prices are far above those exempt
levels. The current exemption levels are now at $2.50, could make
higher than that since prices are higher now, but if they go down,
would be some exemptions. We do not have a number. As the system is
now there really isn’t any exemption.
Tax exemption for money spent on new technology to increase
production, get more reserves out of the ground. This would be across
the energy spectrum, not just oil and gas.
The KCC has allowed unitization of 2 reservoirs because they were
interconnected, co-mingling because of the well bore. Current
litigation in western KS. Want KCC to be allowed.
Hart [for Utilities Committee]: We also were dealing with
consolidation of energy related programs. Did not say we need
cabinet-level energy secretary, but believe energy policy needs to
come through one entity. Everyone in agreement that if change name it
needs to have Kansas in it.
We felt it was important to study issue of renewable energy credits
and certificates, where is country, where markets, use of credits, how
to get plugged into markets, need to study. How Kansas can use that,
Needs to be funding source through SBC or other means of funding.
Strongly believe that to be effective need funding.
Talked about FutureGen project. We should contact Lt. Gov. Moore, tell
him that we think is priority project, criteria for project in KS,
sequestration show up in notice. Lt. Gov. should contact Brownback and
Moore and investigate Kansas chances for project, what is our
potential. Take action.
When renewable energy committee talked about reminded us that
important issue to support TTF, important.
Allison: What I’m hearing with respect to the gas report is that we
have nothing to take forward. We’re stuck with the situation short
term, long term we have some recommendations, some study items.
Springe: Printed out the futures contract info – gave this info at gas
summit. Substantial increase since 9/29, have popped up since 2 weeks
Silver: Keeping public informed about prices is important, helpful, so
you don’t shock them.
Allison: Liz worked with K-State Energy Extension and KCC to develop
and print the brochure on how to be more energy efficient.
We had Shari Wilson from KACEE last meeting to talk about partnering
with SERCC on educating the public on energy. We now want to talk with
Mark Shreve with the KIOGA foundation on partnering. See a lot of
Follow-up on a couple of recommendations: coordination of our energy
policy statewide. Heard from Troy this morning, heard last week at gas
summit. Have some examples to look at to see how to set priorities.
What should the state organization and direction be for energy policy?
Also, the Renewable Energy Credits, but we have a lot on our plate,
like the idea, depends on SBC.
Holloway: May be good arguments for doing both, this year will be the
end of the 2-year legislative cycle.
Brosius: Regarding the structure of next report, I think it would be
good to have a unifying theme. Last year our theme was that instead of
being a net exporter, we are now a net importer. I envision the report
will have a smaller background summary section; we have already done
that last year, we left out the loss of refineries in the state, there
is some updating to do, will be a smaller document.
Allison: If we could get Commerce’s report on the economic impact in
the state, we have Jim’s materials to use, everything is so
uncoordinated and spread out, industry community wants to see brought
together, potential, will have forecasts, recommendations –
legislation, study items.
Brosius: Nothing written yet.
Silver: With smaller number of issues, the committees may want to have
rather than a bullet more of a paragraph.
Brosius: Between now and Nov. 19, there is room for comment, adding
recommendations, wanted on the table by today.
Allison: We may have something from TTF by then.
Brosius: The report will also include what we have done this year. I
welcome your input, suggestions, comments, concerns; send to Lee or
me. Need people helping with production and consumption forecasts.
Allison: I want your input on how to do the voting. Last year we did a
show of hands on 40 some items. We saw some items that were ready for
legislation, some the Council would adopt, some were study items. This
year, we have about 20 recommendations or priorities. Do you want them
brought forward with brief discussion? How to go forward with
Menard: Any objections to how we did it last year?
Brosius: Maybe not objections, but there was concern that the
renewable committee not having vote doesn’t have same level of
participation. We did hear that.
Allison: Do we add the renewables committee to vote?
Hart: With the recommendations we have on the table today, don’t see
any conflicts. Think hammer out, and walk out of this room unanimous.
Phelps: I think we are trying to present a balanced position.
Allison: We will use the system we used last year.
Allison: Any new business?
Brosius: Publishing reports?
Allison: We will work on internally. We have a number of reports
coming out – natural gas summit report, blackout roundtable, Jim
Liz’s thoughts is that we would serve as a clearing house for reports,
and make them available.
Adjourned 3:30 p.m.