The Wichita Eagle column that this letter challenges can be found (courtesy of David Roberson - MA & Larry Patton - KS) can be found at: http://www.kansas.com/mld/eagle/news/local/10503909.htm

December 28, 2004 The Editor The Wichita Eagle Dear Editor: Governor Sebelius’ Science and Energy Policy Adviser (and Energy Council Chairman) has greatly overestimated the economic benefits to Kansas of the existing and proposed “wind farms” -- if his views are accurately presented in Ms. Buselt’s December 28, 2004, story, “Projects touted as windfall to state.” Among the economic facts that he has missed are the following: 1. The high capital cost of a “wind farm” – such as the $190 million project planned for Butler County -- is not a $190 million contribution to the economy of Kansas. An overwhelming share of that $190 million (perhaps 75-85%) will be spent outside Kansas for turbines, blades, towers, electronics, cables and other equipment. Very little of the equipment and material will be produced, or have value added, in Kansas. There are a few exceptions (e.g., sand and gravel for the concrete foundations for the towers). 2. Kansas exempts wind energy equipment from property taxes. Any voluntary contributions or payments made in lieu of taxes are likely to have less value than the foregone property taxes. However, the state or local governments will incur costs due to a “wind farm” construction and operation (e.g., road construction and repair, police and fire protection). 3. Few of temporary jobs during the 6-12 month “wind farm” construction period would be filled by Kansans. The higher paid jobs will be filled by people imported temporarily. There will be some jobs for local people (e.g., truck drivers, laborers). Iowa's Department of Natural Resources found that, in the “Top of Iowa Wind Farm” only 20 of 200 temporary construction jobs were filled by local residents. 4. Few permanent jobs would be created. Probably less than 15 for the Butler County project, with some skilled workers brought in temporarily for maintenance and repair work. 5. Temporary workers who are imported probably will be paying income tax on their wages in their home states. 6. There will be little “indirect” or continuing economic benefits. Jobs (e.g., in restaurants, motels) and economic activity during construction will be temporary. Few of the materials and supplies required on a continuing basis will be produced in Kansas and the value added in Kansas will not provide a significant economic benefit. 7. The rental income for landowners who lease land for wind turbines will be very small compared to the added cost of electricity that will be passed along to electric customers. The arithmetic demonstrating this is simple: a. Assume, that the owner of the 150 megawatt (MW) Butler County “wind farm” will pay rent of $5,000 per MW of turbine capacity each year or a total of $750,000 in annual land rental income (i.e., 150 x $5,000). b. Assume also that the wind turbines would produce electricity equal to 35% of their “rated” capacity (i.e., a 35% “capacity factor”). The annual electricity output for the “wind farm” would be 459,900,000 kilowatt-hours (i.e., 150,000 kW x 8760 hours per year x 35%). c. The true cost of electricity from wind is higher than electricity from other energy sources in Kansas. If the electricity produced by the Butler County project cost electric customers only $0.02 per kWh more than they would otherwise pay, the annual addition to the electric bills of the people of Kansas will be $9,198,000 (i.e., 459,900,000 kWh x $0.02 per kWh) That $9,198,000 per year addition to electric bills is more than 12 times the annual rental income received by the few fortune landowners. That $9,198,000 in higher electric bills also means that the people of Kansas have $9,198,000 less to spend in Kansas on food, clothing, shelter, medical expenses, education, or in the local hardware store, gas station, or other retail establishment. 8. Perhaps most important, all the “wind farms” proposed in Kansas would be owned by out-of state companies. That means that the out-of-state companies – not companies or people in Kansas -- would benefit from the extremely generous federal tax benefits for “wind farms” (i.e., 5-year double declining balance accelerated depreciation and $0.018 per kWh of electricity produced during the first 10 years of the project life). Be aware that these tax benefits have been estimated as providing 2/3 of the value of “wind farm” projects to their owners. Of course, the money paid for the electricity produced by the “wind farm” also flows to the out-of-state owner. 9. Finally, an out-of-state “wind farm” owner may pay Kansas very little corporate income tax. Apparently, the generous federal deduction from corporate income for accelerated depreciation also serves to reduce the amount of income subject to the Kansas corporate income tax. When all the true economic costs and benefits are added up, a “wind farm” in Kansas probably results in a net economic loss for Kansas. As stated at the beginning of this letter, the Governor's adviser greatly overestimates the favorable economic impact of a “wind farm.” Sincerely, Glenn R. Schleede 18220 Turnberry Drive Round Hill, VA 20141-2574 540-338-9958