Kansas Renewable Mandates Causing Skyrocketing Electricity Prices

Kansas Renewable Mandates Causing Skyrocketing Electricity Prices
January 24, 2014

James M. Taylor

James M. Taylor is senior fellow for environment and energy policy at The Heartland Institute, and... (read full bio)

Renewable power mandates are causing a dramatic spike in electricity prices in Kansas, U.S. Energy Information Administration data show. The state’s electricity prices have risen approximately eight times faster than the national average since Kansas enacted renewable power mandates in 2009.

In 2009 the Kansas legislature passed legislation creating the mandates, which require Kansans to purchase 20 percent of their electricity from designated renewable sources by the year 2020.

Sharply Rising Prices
Since 2009, U.S. electricity prices have risen merely 2.4 percent, from 9.89 cents per kilowatt hour to 10.13 cents per kilowatt hour (data through October 2013, the most recent month for which the U.S. Energy Information Administration published data when this paper went to press).

In Kansas, by contrast, electricity prices have risen 19.4 percent since 2009, from 8.07 cents per kilowatt hour to 9.64 cents per kilowatt hour.

The increase in Kansas electricity prices masks an even faster rise in electricity costs in the Sunflower State. Federal taxpayers (including Kansans) provide substantial subsidies to renewable power producers, most notably through the wind power production tax credit. These additional costs are hidden; they are not reflected in the Energy Information Administration retail price data.

Directly Traceable to Renewables
The rise in the state’s electricity prices closely tracks and is directly attributable to the increasing generation of costly renewable power. Wind power makes up nearly all the renewable power generation in Kansas. Since 2009, Kansas has more than tripled the share of its electricity mix generated from wind power. In 2009, 6 percent of electricity generated in Kansas was from renewable sources. In 2013, approximately 20 percent of the state’s electricity was generated from renewable sources.

Power grid operators confirm the higher costs renewable power imposes on consumers. Andrew Ott, senior vice president for markets at PJM Interconnection testified in Ohio legislative hearings last spring that the cost of delivering wind power to electricity consumers is two to three times the cost of delivering conventional power. PJM Interconnection coordinates electricity in 13 states. These cost premiums apply in Kansas, as well.

Households Hit Financially
These rapid electricity price increases are imposing real financial hardship on the state’s residents. Had electricity prices increases in Kansas matched the national average since 2009, the state’s electricity consumers would have saved $557 million in electricity costs. The average Kansas household has already paid an extra $506 in electricity costs (nearly $130 per household per year) above what it would have paid if the state’s electricity price increases had kept to the national average.

James M. Taylor (jtaylor@heartland.org) is managing editor of Environment & Climate News.

James M. Taylor

James M. Taylor is senior fellow for environment and energy policy at The Heartland Institute, and... (read full bio)