State Energy Resources Coordinating Council Agenda and Notes

February 28, 2003

(www.kansasenergy.org)

SERCC Agenda
Meeting Location: Kansas Corporation Commission hearing room
130 S. Market
Wichita, Kansas

10:00 am   Full Council

Review of 2003 State Energy Plan
    Report on Legislative response
    Lessons learned - plans for the 2004 report
Status of Abstract and Atlas - Liz Brosius
Changes or additions to study items
Assignment of study items (tentative committee assignments)
    Incentives for renewable energy: (Emerging, Electricity)
    Educational programs (all committees)
    Value of petroleum industry to Kansas (Petroleum)
    Utility demand-side management, time-of-day pricing (Electricity) "Green" energy sales (Electricity, Emerging)
    Utilities participation in renewable energy groups (Emerging, Electricity)
    Systems benefits charges (Electricity, Emerging)
Council actions, assignments, and schedules
    Energy Conference - "Governor's Summit on Energy Self Sufficiency"
    R&D working group - goals, members, deadlines
    Reviews of other states' programs and actions (staff assignments) Establish awards program for energy savings

11:30 am   Sector Committee breakouts (working lunch)

All committees:
    Review and prioritize study items
    Meeting the challenge - How do we make Kansas energy self-sufficient and a net energy exporter?
Electricity Committee additional item: Transmission Task Force goals, members, deadlines

 1:00 pm   Full Council

Committee reports
Old business
    Staffing and funding for council activities
    Meeting schedule - are quarterly meetings enough?
New business
    Is there need for a conservation committee/working group or other committees?
    Guidelines and goals for public hearings

  2:00 pm   Adjourn

State Energy Resources Coordination Council Notes

February 28, 2003 - KCC - Wichita

Committee Members Present: Lee Allison, David Dayvault, Spencer Depew, Lee Gerhard, Colin Hansen, Galen Menard, David Phelps, Alex Silver, David Springe, Michael Volker

External Committee Members Present: Donna Johnson, Richard Nelson, Jeff Roskam, Bruce Snead, Kyle Wetzel

Staff present: Liz Brosius, Morris Korphage, Jim Ploger

Meeting was called to order at 10:05 a.m. by Chair Allison.

Allison: Welcome to the first meeting of 2003, looking at the agenda, we have a lot to cover, and need to move quickly. Introductions: Liz Brosius, with KGS, served as lead editor of the energy plan, distributed mid January, will serve as chief staff person here, pleased with her work, great contribution.

Report on Natural Gas Storage, brief overview, because of reporters, will cover this now. Going back to Jan. 2000, showing annual cycles, summer of 2000 gas storage between 500-1,000 cubic feet, in the summer, companies buy gas and store, average range, beginning of winter, peak with amount of gas in storage, range over number of years, beginning in Jan. 2001, storage at bottom of average for number of years, so beginning of winter of 2001, had price spikes, we were down at bottom range of storage, markets having to buy from all over, summer of 2002, had warmer winters, recession, were able to get storage up, winter of 2002 had good storage, worked well for summer, now winter 2003, storage didn’t peak out as much as in past, colder winter, storage starting to fall below average trend, predict storage is going to fall below average range, 900 Billion cubic feet, demand will cause price spikes.

Dayvault: have followed this myself, think things may be worse than that in the eastern sector of the country, if the weather stays cold, possible that places east of here may experience higher energy prices, storage will fall below average.

Gerhard: on a national basis, need to look at the next 2-3 years, colder weather will continue, can’t access storage that we used to, not good for national economy, higher energy prices.

Springe: we go through meetings that consider what affects consumer rates, one reason we are in low storage period, had lower gas prices, used storage, severe winter in east, low in storage because they hit early. Consumers impact — high market prices, increase in utility price for consumers. Depends on weather, price element, volume element. Uncertainty about storage. KGS (KS Gas Storage) - 4.5/month, Aquila - 6.50/last month.

Volker: Midwest Energy is buying all their gas on price index, working out risk management program, meeting with CURB soon. What consumers ultimately pay can’t be controlled at state level, national price for gas, what consumers pay is driven by national market. Price volatility not good for producers. This groups' recommendations are important. Tax policy? Rebates?

Springe: from the producers that are here today — are you buying/selling?

Gerhard: maybe supply side won't be as bad as distribution side.

Springe: Natural gas is the most volatile commodity in the nation right now.

Depew: Today’s Wall Street Journal lead article is about what we are talking about today. Good articles.

Allison: when we break, we will add one item to each committee, electric and petroleum. To look at what we are talking about, recommendations or actions . We have been invited to the House Utilities committee on March 13, to give in depth review of energy plan. Want to go into detail and look at graphs and charts. This would be a good time if we have some recommendations, with price spikes, take the opportunity to present to the committee. When we reconvene, would like you to have recommendations on the actions we might take, use them to brief the governor, etc. Look at recommendations to KCC, what we can do as a council in the short term to look at long term. Thank you for comments, helpful.

Allison: back to agenda — summarize what has happened with the energy plan. Distributed the two house bills and the house resolution. HB2131-efficiency standards, council recommended updating the ASHRI standards. Bruce Snead drafted amendments.

Snead: became aware of international standards, includes updating energy efficiency guidelines for home construction. Was passed in 1997. It seemed like an appropriate time to take advantage, has no fiscal note, update standards across the board, we have a document now, commercial and residential guidelines. Model energy 1993 has been absorbed into ??? Recommendation was that prospective house buyers receive the rating sooner.

Gerhard: any opposition?

Snead: No, there were questions if this would increase the cost of new construction, no it doesn’t. Higher performance, disclosure statement still in effect, building doesn’t have to do anymore than did before.

Allison: HB2282-punitive damages — hasn’t had any action, house is running behind.

Depew: heard that this bill will not have any hearings, will be carried over to next year.

This group hasn’t seen it until was introduced, need to review it, is much broader than our intent. Petroleum group will review.

Allison: this past week HR5015 was introduced — implementation of performance contracting standards in state buildings — had an ad hoc working group on this — walked through with committee staff — to all state agencies to take advantage of performance contracts, there are other programs for loans that agencies can get help in doing some of these things, legislature recommend that agencies demonstrate what they have done, legislature review as part of budget process. Different timeline on resolutions, should not be held back because hasn’t been heard.

Allison: report for 2004, we worked quickly to put 2003 together, one of discussion items is what do we want to do differently, don’t have to decide today, have longer time frame, little different motivation, was recommended to us to come up with things that didn’t have a financial impact on state. May have some things come forward that does have financial impact.

Brosius: we took recommendations that were made a long time ago and worked through those, this council may have some additional recommendations, budget not getting better. Summary or overview of KS energy — could use more renewable energy data and info, drawing from published info EIA — make more rounded.

Allison: some sections had more detail than others. Let’s make sure we cover topics.

Gerhard: one thing that might be useful, set KS in nation, where is KS at within the nation.

Allison: status of abstract and atlas — tables and graphs showing where Kansas falls, Liz is close to wrapping up.

Brosius: in November we circulated tables and figures on energy related to KS, some was where KS ranks in production numbers in the US, we updated tables and included graphics in energy plan, need to write up text to pull together with graphics and tables, needs to be reviewed. Then can put out, will update either yearly or every other year.

Allison: need data on renewables, don’t have the info going back like we do for the other sectors.

Brosius: if any of the council members would like to see where we are, would be happy to share and have you look over.

Allison: assignment of study items: discuss briefly — suggest committee assignments, look at each item assigned to committee, prioritize how you want to look at, recommendations, bring back to council, how to implement. So by the end of the year we will have those worked out through committee structure, so will have fleshed out. There are four things for the council itself to work on. Will have electricity committee come back with some recommendations on transmission task force.

Energy conference: was suggested to join with the wind conference, I sent out the idea to the council and got mixed responses. Bring forward as discussion item for today and try to decide.

Gerhard: what do we want to accomplish?

Silver: Topic — self sufficiency.

Johnson: last year we held the wind conference, and EUREKA, was separate conferences back to back, shared a few speakers, got higher level from FERCC, not a lot of overlap of who went to the two conferences. That is what I suggested to Lee, to reduce the cost.

Allison: thought also it would help with staffing, we have no staff to run this, have pulled Liz off other projects. Will have to call on council members to help.

Ploger: we are working toward expanding the wind conference, to include biomass, will be held here in Wichita. Planning for one and a half day conference. Cost of the conference is $55K (KCC grant) — have raised $15-20K.

Allison: the problem is who is chairing the conference from the council? We can’t come up with staff time. We are losing Scott White, he is working on other contracts, KGS has no money to pay him. Any fund raising ideas? Should we partner with the wind, biomass conference, do back to back? Is this something we want to do? Working group, go into committees and discuss.

Snead: additional item for committees for today.

Johnson: the proposals for the conferences are due to Jim Ploger by Monday.

Allison: ask each committee what you want for an annual energy conference, we mentioned last fall, to have a sector conference? Not one state-wide conference

Depew: projects like this — self sufficiency of KS, isn’t that something that KS INK could help us out with?

Allison: we will make a preliminary decision today — bring back from the committees at 1:00 today.

Volker: concerned with making state energy conference Related to KIOGA, or ??? But for efficiency sake makes a lot of sense, keeping separate conference Piggy backing. Less concerned.

Wetzel: from perspective of the wind conference, trying to piggy back too many, waters down the importance, those that sponsor may not want to associate with other conferences.

Silver: we have two issues in committee: what do we want our conference to be, and what do we want to accomplish.

Allison: R&D working group: what I envision, pull together leaders from states universities, Vice Provost for research or equivalent at each university, and industry folks, make task force or work group to look at what we need to do in the state of KS. Make task force to bring back recommendations.

Gerhard: we already have a group similar to that — Sen. Roberts task force, Tim Carr chairs the energy group. May want to look at that group, it has done a lot of work in the past. Includes industry, aerospace, etc.

Allison: Sounds like there are groups out there already, we may play a role in looking at what is out there.

Wetzel: NIAR/WSU - funding to create institute.

Johnson: KS INK did a study a year and a half ago, one of their groups was energy. They have disappeared.

Allison: need to locate, may have a lot of this pulled together. Other state’s programs and actions — Scott White was keeping track of anything he could find, and puts it on the web site. Oklahoma has a new energy plan out in January, through staff and your efforts in keeping eye out for things, we will compile what is going on in other states. Ad hoc basis, suggestions, different directions.

Johnson: a couple of years ago did a report for KCC — asked other states for info, very significant.

Allison: can we get electronically?

Johnson: can PDF it. It contained recommendations to Ploger’s office on what to do in future. It was done in 1999.

Allison: Introduced Jeff Roskam to the group. Brings ethanol experience. Awards programs for energy savings — don’t have strong feelings on this. Council or committees to look at. Any thoughts on moving forward on how to do this? Let’s think about, talk about in committees, will come back to it. May need to have listserve discussion item.

11:18 — Breakouts: Have 1 and 1/2 hours for breakout sessions. Reconvene at 1:00.

Wetzel: Committee developed - siting guidelines for wind farms that counties are adopting. The issue is contentious.

Volker: perhaps the council could recommend.

Petroleum, room 582

Emerging energy: here

Electricity: 4th floor

1:22 reconvene.

Allison: Energy conference Looks like there is consensus to have a 1 day energy conference, we as a group would like to piggy back with the wind/biomass conference, for logistics, cost efficiencies and staff efficiencies, early October — Wichita. Should approach the governor to put a name to it and attend, otherwise would be a statewide energy conference

Volker: No, the electricity committee prefers keeping very separate. The idea is not bad, the general feeling is to keep separate.

Dayvault: No, this committee is sensitive to the need of creating efficiencies, appreciate what the wind conference could do, but having trouble on what the purpose of the conference should be. Overreaching, large conference, who attends, what the aims might be, going into a time of high gas prices, could be a gripe session. Could see a smaller conference that could create public education. Get media attention, get facts on energy production and consumption in KS in front of Kansans on the local news.

Silver: it is possible to have a governor’s conference, back to back with the wind/biomass conference Agenda is separate issues, carry itself on own merit, timing, if issues become more prominent, would have opportunity to discuss. Don’t know how we can do on our own.

Wetzel: is the focus policy? Drafting policy, or education conference? The wind conference is to educate.

Silver: we can’t say we set policy, see as education, gather info and distribute info.

Allison: did the other committees address what we should be doing at a conference?

Dayvault: struggling with what the focus should be.

Volker: should be focusing on low cost, long term energy supply that is reliable, if you change the focus of what this group is about, would change what the focus of what the conference is. Need to know what the focus is of the group before the conference

Silver: energy self sufficiency — should it continue to be the focus? If we can pick the right title.

Dayvault: unrealistic for KS to be self sufficient.

Allison: we have been working with a number of the governor's staff, think that I am hearing that this conference is important. The governor has a personal interest, her brother is involved in energy as his business and he briefs her. I suggest that we put the conference on hold for the moment, I will get back to the governor and see if she has a theme or direction she would like to see, give us some focus as an energy council, instead of beat to death. Because of time constraint will not combine with the wind conference.

Allison: we will hear now from each committee a briefing on the results of the breakout session.

Volker: changing focus - rather than energy self sufficiency, in the long run, lower cost energy ideas, production and consumption. Opened up a whole new box. Consumption — systems benefit charge has implications both on consumption and production. Study real time pricing, what implications that might be, demand related education, require utility help in implementing, by the way, to a degree, had questions that electricity committee should be changed to utility committee.

Allison: unilateral decision on my part in October, you are now renamed - Utility.

Volker: on production side, transmission issues are very important.

Allison: if renaming committee, do you have the right committee members? You can add if you think you need additional representatives.

Voker: could use someone from gas.

Allison: work with Barry Hart, identify needs and make recommendations. The others of you can also make recommendations.

Volker: other production, incentives for renewables, help economics of renewable, production capability probably area for greater potential, resource base more growth.

Springe: figures petroleum could bring those issues forward.

Volker: focus on utilities committees rather than electric. Encourage development of energy storage, renewables or nonrenewables applications. Also, threw out the thought on volatility, perspective more on consumer end, how to manage utilities for risk management but upstream of that is assuring volatility isn’t a hindrance.

Transmission task force, none of us up to date on that, could find out, will pursue and report back. Senator Holmes may already have some folks looking at this - combine - need to look at regionally.

Allison: committees are allowed to meet on your own, electronically, etc.

Dayvault: carbon, coal, talked about HB2282, recognize that needs to be rewritten. Would have problems as written, that let actual damages, would not hold up to court scrutiny. Try to find someone to draft in better manner and submit next year. How do we make things work better, to utilize petroleum, natural gas, get out of the ground and to the marketplace. Where exploration should be focused, small producers, not of ability to put together capital to focus that type of effort towards broader thinking research and development, exploration. University level, industry welcome assistance. Res. & Dev. - lot of promise in bringing oil and gas out of existing reservoirs. Technically, worked elsewhere, carbon dioxide flooding, capital constraints of small producers, outside, limiting factor. State not in position to put in own pipeline. Oil and gas is in play, furthest away from supply. State may be able to help with tax structures, property tax exempt. To bring effort to central KS, explore. Other alternatives to bring into areas closest to existing supply. Public education — over next year or longer - shortages, factors, political events that will bring petroleum gas sector to the forefront. Benefit if public gets right picture of why we are where we are, partner with organization that does public education. Benefit, council take this on, on their own, focus on existing media outlets is the most efficient way to put together factoids — newspapers, TV — public might not be aware of — have a lot that is going to be on our plate over the next few months, lot of attention, scrutiny, develop some specific proposals.

Allison: thoughts on the presentation to legislature on the 13th?

Dayvault: did not get to that.

Allison: since appointed by executive order it is OK to approach the governor. My guess is we are going to hear about on the 13th, all of you are invited.

Silver: didn’t solve the problems of the world, systems benefit charge — deserves and needs economic support, has to be some funding to support this energy council. Surcharge on energy, as a group, identify funds, not for use of legislature, but for this group, energy in state of KS deserves funding and support. Could make long range impact on KS energy. Education: think appropriate to suggest or identify an element in K-12 to provide info. Should support or encourage technical education for oil field requirements, general public education. To make energy info to public, didn’t get to details on how to do. Didn’t stir up enthusiasm for green energy. Like the concept of utility support for renewable energy group and renewable energy activities, concurred on need, utilities as part of KS long range energy program, they have to be involved, how do you obligate them, voluntary participation, encourage them to be involved in discussions.

Allison: may take a letter from this council to encourage them, make recommendations along those lines.

Allison: no funding, reduced staff from last fall, continue to find ways for support, not obvious sugar daddy, hope to pursue with governor's staff. Meeting schedule — would like thoughts on quarterly meetings — need to set next meeting.

Springe: are we to put together a document each year?

Allison: Executive order says we are to provide report each year.

Springe: we are changing the focus, could end up the last four months putting together a hurry up report.

Depew: recommend quarterly meetings with extra meeting in the fourth quarter.

Allison: for the one-year plan, I had proposed a meeting in Topeka in May, Wichita in August, Topeka in November.

Gerhard: could have meetings in May, July, October, November.

Brosius: would hope that the committees would meet or talk other than these set meetings.

Allison: also thought that we could extend the length of the meetings, 9-4 instead of 10-2.

Brosius: in the emerging energy committee, I raised the idea that the study items would probably end up with some sort of report that would go into the plan.

Allison: How about have our meetings in May in Topeka, July in Wichita, October in Topeka, November in Wichita.

Hansen: I invite you to McPherson in October.

Allison: 9:00 a.m., October 8 or 15 in McPherson — depending on the dates of the wind conference. November 19 in Topeka - 10:00.

Allison: two areas of new business — do we have a need for a conservation committee/working group or other committees to add to council? We don’t have a group or individual focusing on conservation, resource protection.

Depew and Silver: Feel the answer is no, that area is already covered in this group, within each committee.

Alison: leave things as they are, any other committee? Anything else we need to look at?

Springe: each committee is dealing with pieces of conservation related to their area. Maybe a joint subcommittee that can take the pieces for education. Educating broader than conservation, every committee comes back to an education piece.

Volker: we are all doing, good and bad to that, piecemeal, if we have a separate committee it is lost, but if we have committee that has a member from each committee, would help.

Allison: what if we add an individual, a specialist on efficiency or conservation that we appoint to the council but that would float, work with all committees to pull together conservation and efficiency recommendations?

Ploger: our office puts in $5K each year, National Ad Council, 5-year program, public service, energy conservation, starting this spring. Maybe next time have examples.

Allison: if everyone would look around for someone that could add to all the committees, let me know.

Allison: What about public hearings? Encourage written testimony, invite people to make presentations to the council. Could do like the natural resources legacy alliance where they went all over the state. May be more than we can handle.

Volker: what is the objective?

Allison: anyone that has an issue could come forward.

Volker: my experience, useless, not useless to get the information, public hearings in traditional sense is ineffective in finding out public's feelings. Think that public input is very good. Don’t think right forum.

Dayvault: we have open meetings, fairly informal, if someone has something to say, they have outlet in our existing format, extending day for public.

Snead: It would enhance credibility to have public input, don’t think putting out our report and expect public to make comment is unlikely. Need to actively seek input.

Gerhard: maybe we should put out our draft report in October for public input, then come back.

Wetzel: agree with Bruce on public input.

Volker: we could do a phone survey, may be an avenue, wouldn’t cost much to do, think could get opinion on particulars or willingness to look at our plan. Expect feedback after looking at plan. Don’t know if you can tap into other utilities to gather opinions. Idea is great to get public input.

Allison: hearing that we would be gathering input from general public, my thinking was that we would get input from business industry, kind of groups, you are saying that those groups are represented here.

Snead: could have something that would feed into a conference that talks about energy views of KS. Whatever it might be would be well warranted.

Johnson: there have been several surveys on renewables, that data already exists.

Silver: in reference to accessibility to public, open to public, agree that people that most often show up at public hearing have a bone to pick. Sometimes you need to go through those motions, to show that the mechanism is in place.

Allison: Kyle’s proposal wasn’t the only reason to put on agenda. Had a number of people in the audience last October that requested time to make a presentation. Will not have an hour on the next agenda for public comment. This group should have another discussion.

Adjourned at 2:35 p.m.