By DUANE SCHRAG

Salina Journal

Wind energy might not look like a bargain to some utilities, but the marketplace evidently believes otherwise.

A newly released study by the Kansas Corporation Commission concludes that substituting wind for existing power would slightly raise the cost of electricity - from virtually no increase to as much as half a cent a kilowatt hour (the retail price is typically 6 to 10 cents), depending on the utility.

But if a long-anticipated carbon tax is imposed, wind could easily become, hands-down, the cheapest source of power.

The report's cautionary tone -- it notes that at one point that an increase of one-thousandth of a cent a kilowatt hour might not be much, but "that it is an increase in the critical element" -- doesn't appear to be shared by wind farm developers.

"The marketplace is speaking very loudly that wind will be a major part of our electric future," Lt. Gov. Mark Parkinson said Friday in an interview.

The study was requested by Gov. Kathleen Sebelius in January 2005.

"I am challenging our electric industry to have 1,000 megawatts of renewable energy capacity installed in Kansas by 2015," the governor wrote to the KCC. "... I would like the Kansas Corporation Commission to look at the full range of benefits that renewable energy brings to Kansas and how those relate to additional investment that may be needed to meet the goals I have outlined for the electric industry."

What the governor received was the cost/benefit implications if utilities were to displace some of their current power with wind. Thus, the study compares the full cost of wind with the savings utilities would incur by using less fuel.

For utilities that rely heavily on natural gas, using wind instead adds virtually no cost. The study found that for the average utility that meets the governor's challenge by buying wind from a wind farm, rates would go up 0.28 cents a kilowatt hour.

Interestingly enough, it concluded that if utilities built, owned and managed their own wind farms, rates would go up 0.51 cents. The increased cost reflects the assumption that utilities won't be as aggressive and effective in controlling costs if they own the wind farms.

However, a carbon tax would change all that. When a carbon tax will be imposed, and how large it will be, has been the subject of considerable speculation.

The Kansas Legislature has flirted with the idea; Congress has been talking about one for years.

It is one of the reasons Westar Energy recently announced it is putting off for as long as possible its plans to build a new coal-fired power plant.

Speculation is that a carbon tax will be anywhere from $5 a ton to $50 a ton of carbon dioxide. The proposed coal plants in Holcomb would emit about 1,300 tons of carbon dioxide every hour.

"It is possible that potential carbon tax savings would push the challenge into the cost-effective category," the report says. "... The carbon tax would need to be about $37/ton in order to push the challenge into the cost-effective category."

Wind is still often described as being more expensive than coal. Filings with the KCC reveal that Westar Energy has a 20-year contract to buy wind power at 4.1 cents a kilowatt hour. At the same time, it estimates that if it built a new coal-fired power plant, the electricity would cost 5.5 cents.

"When it is properly sited, (wind) is already cost-competitive with new coal or new nuclear," Parkinson said. "If a carbon tax is imposed, then we will very quickly develop thousands of megawatts of wind."

Parkinson noted that wind is already developing at a rate far in excess of the governor's challenge of 1,000 MW by 2015.

"We now know there will be more than 1,000 MW by 2008," Parkinson said. "The marketplace is providing us an answer."