|Select Economic and Energy Data†||Value||State Rank|
|Real Gross Domestic Product, per capita||$35,013||23rd lowest|
|Gasoline Price, per gallon||$2.71||14th lowest|
|Electricity Price, per kWh||8.07¢||18th lowest|
Kansas has moderately low electricity prices, 18 percent below the national average. In large measure, this is because about 70 percent of Kansas’s electricity is produced from coal, the most inexpensive source of electricity. Kansas, however, has enacted several policies, including a renewable portfolio standard, which could increase the cost of electricity. Renewables currently produce almost 6 percent of the state’s electricity. The state’s single-unit Wolf Creek nuclear plant meets most of the state’s remaining electricity demand.
Kansas produces substantial quantities of natural gas. It contains the Hugoton Natural Gas Area, the fifth-largest natural gas field and one of the top-producing natural gas fields in the country. In addition, natural gas production from coalbed methane is rapidly expanding in the Cherokee Platform, where reserves have become economically recoverable. The state’s infrastructure serves as a transportation hub for natural gas supplies moving across the country. Kansas is also one of the top ten oil-producing states in the nation, producing about 2 percent of the country’s output, and is also a major oil refining state.
Regulatory Impediments to Affordable Energy
Although affordable energy is a vital component of a healthy economy, regulations frequently increase energy costs. Regulations imposed in the name of reducing carbon dioxide and greenhouse gas emissions are especially costly. Carbon dioxide is a natural byproduct of the combustion of all carbon-containing fuels, such as natural gas, petroleum, coal, wood, and other organic materials. Today, there is no cost-effective way to capture the carbon dioxide output of the combustion of these fuels, so any regulations that limit carbon dioxide emissions will either limit the use of natural gas, petroleum, and coal, or dramatically increase their prices.
Below are some facts about Kansas’s regulatory environment that are likely to affect the cost of energy or the cost of using energy.
- Kansas does not cap greenhouse gas emissions.
- Kansas is a member of the Midwestern Regional Greenhouse Gas Reduction Accord, a regional agreement among six American governors and one Canadian premier to target greenhouse gas reductions. The central component of this agreement is the eventual enactment of a cap-and-trade scheme, perhaps supported by low-carbon fuel standards and other supplemental policies.
- Kansas is an observer of the Western Climate Initiative (WCI), a regional agreement among some American governors and Canadian premiers to target greenhouse gas reductions. The central component of this agreement is the eventual enactment of a cap-and-trade scheme to reduce greenhouse gas emissions 15 percent below 2005 levels by 2020. As an observer of the WCI, Kansas would not be bound to agreements made by WCI members.
- Kansas requires utilities to sell a certain percentage of electricity from renewable sources. The state’s renewable portfolio standard requires utilities to provide 20 percent of peak demand capacity based on the average demand from the previous three years from renewables by 2020 and beyond.[i] Also, in 2007 Gov. Sebelius’s administration became the first state government to reject a permit for a coal-fired power plant because of carbon dioxide emissions.
- Kansas does not require gasoline to be mixed with renewable fuels.
- Kansas does not impose automobile fuel economy standards similar to California’s, which include attempts to regulate greenhouse gas emissions from new vehicles.
- Kansas does not require new residential buildings to meet energy efficiency standards, but does require new commercial buildings to do so. Commercial buildings must meet the 2006 International Energy Conservation Code (IECC).[ii] The IECC, developed by the International Code Council, is a model code that mandates certain energy efficiency standards. While Kansas does not have a residential energy efficiency code, realtors and homebuilders are required to disclose energy efficiency information to potential buyers for residential buildings.[iii]
- Kansas does not impose state-based appliance efficiency standards.
- Kansas does not allow utilities to “decouple” revenue from the sale of electricity, but the Kansas Corporation Commission is investigating decoupling as a possible policy option. Some states decouple revenue from actual sales, allowing utilities to increase their revenue by selling less electricity and natural gas.
† Data Sources: Real GDP per capita 2008: Bureau of Economic Analysis, News Release: GDP by State (June 2, 2009), http://www.bea.gov/newsreleases/regional/gdp_ state/gsp_newsrelease.htm; Unemployment: Bureau of Labor Statistics, Regional and State Employment and Unemployment–February 2010 (Mar. 10, 2010); Gasoline Prices: American Automobile Association, AAA Daily Fuel Gauge Report (Mar. 30, 2010); Electricity Prices: Energy Information Administration, Electric Power Monthly, Table 5.6.B., Average Retail Price of Electricity, (March 15, 2010), http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html; Electricity Generation Data: Energy Information Administration, Electricity Generation 2009, http://www.eia.doe.gov/cneaf/electricity/epa/generation_state_mon.xls.
[i] Senate Substitute for House Bill 2369 (Kan. 2009), http://www.kslegislature.org/bills/2010/2369.pdf.
[ii] Building Codes Assistance Project, Code Status: Kansas, http://bcap-energy.org/node/69.