Policy Documents

The Economic Impact of the Kansas Renewable Portfolio Standard

David G. Tuerck, Paul Bachman, Michael Head –
July 1, 2012

Executive Summary

In May 2009 Kansas Gov. Mark Parkinson signed several statutes into law (first proposed by his predecessor, Gov. Kathleen Sebelius) that defined a new Renewable Portfolio Standard (RPS) and a timetable for implementation. The legislation transformed a previously voluntary goal into a mandate. The following year, the Kansas Corporation Commission submitted the rules and regulations that would dictate the administration of this RPS. The standard requires that at least 10 percent of electricity generation capacity in Kansas come from renewable sources between 2011 and 2015. Between 2016 and 2019, a 15 percent share of generation capacity must derive from renewable sources, and from 2020 onwards no less than 20 percent of generation capacity must come from renewable sources.

The Beacon Hill Institute has applied its STAMP® (State Tax Analysis Modeling Program) to estimate the economic effects of these RPS mandates. The U.S. Energy Information Administration (EIA), a division of the Department of Energy, provides optimistic estimates of renewable electricity costs and capacity factors. This study bases our estimates on EIA projections, but we also provide three estimates of the cost of Kansas’s RPS mandates – low, average and high – using different cost and capacity factor estimates for electricity-generating technologies from other academic literature.

Our major findings show:

•The Kansas RPS law will raise the cost of electricity by $644 million for the state’s consumers through 2020, within a range of $192 million and $1.042 billion

•Kansas’ electricity prices will rise 45 percent by 2020, due to the RPS law

•These increased energy prices will hurt Kansas’ households and businesses and, in turn, inflict significant harm on the state economy. In 2020, the RPS will:

•Lower employment by an average of 12,110 jobs, within a range of 3,615 jobs and 19,609 jobs 

•Reduce real disposable income by $1.483 billion,within a range of $443 million and $2.402 billion

•Decrease investment by $191 million, within a range of $57 million and $310 million

•Increase the average household electricity bill by $660 per year; commercial businesses by an average of $3,915 per year; and industrial businesses by an average of $25,516 per year.