895-megawatt unit will provide baseload energy and jobs

Hays, Kan.—Dec. 16, 2010— Sunflower Electric Power Corporation was notified today that the Prevention of Significant Deterioration air quality construction permit for its 895-megawatt Holcomb expansion project was approved by Acting Secretary of the Kansas Department of Health and Environment John Mitchell.

This decision, which concurs with the recommendation by the KDHE’s technical staff, allows Sunflower to proceed with construction of a coal-based unit that will provide both necessary baseload energy and an economic boost to the state of Kansas. Sunflower is owned by six distribution cooperatives that serve 400,000 members throughout central and western Kansas.

The $2.2 billion project will take approximately 52 months to build and generate an estimated 5,900 job years (one job for one year) throughout the state of Kansas, paying $250 million in labor income and generating $400 million in total income. During each year of operation, the unit will generate more than 260 jobs statewide, paying $17 million in labor income and almost $200 million in total income.

“This state-of-the art project is good for Kansas ratepayers, Kansas workers, and Kansas businesses,” said Earl Watkins, president and CEO of Sunflower. “We have been faced with many challenges in this endeavor, and we appreciate the support we have received statewide. In addition, we appreciate the professionalism and expertise of the KDHE technical staff members, who have worked long and hard to make certain the air construction permit for our project protects the environment and follows strict state and federal requirements.”

Sunflower initially filed an application in 2006 for three 700-megawatt units. In 2009, as a result of a bi-partisan compromise, Sunflower was able to resume the permitting process for the current 895-megawatt project. Since 2006, the KDHE has hosted seven public hearings and had more than 200 days open for public comments.

“Sunflower has a long and proud record of being an environmental steward,” Watkins said. “In pursuing this project—like all of our efforts—we have been transparent, we have practiced due diligence, and we have adhered to all environmental requirements. The decision by the KDHE secretary and staff once again confirms it. It is time to move forward with this project that Kansans justly deserve.”

What Others Are Saying:

“Positioning Kansas for job growth requires being visionary and balancing the three E’s—energy, the economy, and the environment. The Holcomb expansion project will generate needed baseload energy using the latest technology and will boost the economy in the process. It’s a great example of balancing the three E’s.” –Governor-elect Sam Brownback

“I am very pleased with the Kansas Department of Health and Environment’s decision to approve Sunflower’s bid for an air quality permit. The new supercritical unit at the Holcomb Station will put to use the most cutting-edge technology, making it one of the most efficient in the world. Sunflower has diligently proven its commitment to environmental stewardship in this project and throughout its operations. Recognizing our need for more baseload energy and the good jobs that come with the construction and operation of the new unit, this is an exciting development for Sunflower, for Holcomb and for the entire state.” –Senate President Steve Morris

“Balancing the state budget is like balancing your checkbook: it’s difficult to do if the money’s not there. At a time when Kansas, along with most states, is facing a deficit, the Holcomb expansion—an environmentally-sound project that generates annual state and local tax dollars of more than $41 million—is welcome news.” –House Speaker Mike O’Neal

“A build-out of the already existing Holcomb Station is a win-win project for 400,000 cooperative members in central and western Kansas. The Holcomb expansion will not only provide needed baseload energy and jobs, it will also create a revenue stream by maximizing the current site, thereby keeping energy costs as low as possible. Such visionary projects are essential to preserving the way of life we value.” –Senator Janis Lee

“Expansion of the Sunflower plant brings the latest and best pollution control technology while creating much needed jobs. Even better, the power lines constructed to move the power should actually help us expand wind energy in Kansas.” – State Treasurer Dennis McKinney

“As the president of the Building and Construction Trades Council and business manager of Plumbers and Pipefitters Local 441, every day I hear from members who are out of work. As the largest construction project in the state, the Holcomb expansion will provide labor income totaling more than $400 million for our members. I assure you this news will make Christmas merrier for many of our members.” –Rich Taylor, president of the Building and Construction Trades Council and business manager of Plumbers and Pipefitters Local 441

“There is a direct correlation between a growing economy and access to reliable, affordable energy. Kansans have the will and heart to revitalize the state’s economy if given the means to do so. The Holcomb expansion project will provide needed baseload energy, creating a friendly environment for business.” –Kent Beisner, president and CEO of the Kansas Chamber

“Sunflower has been a good neighbor, providing affordable energy and good jobs that allow our region to prosper. As good corporate citizens they have supported our economic development endeavors, and this project will bring even more economic growth to Garden City. Many people have worked long and hard to support this project, and we’re extremely pleased that the permit has been issued.” –J.R. Behan, mayor of Garden City

“The Kansas Legislative Policy Group is an organization of central and western Kansas counties that looks forward to a project that provides a sensible approach to providing baseload power and renewable energy opportunities. We also look forward to the positive impact the jobs, taxes, and new opportunities will have on our counties for decades to come.” –John Miller, KLPG president

“This is an exciting time for Finney County and Kansas. The Holcomb expansion project will not only generate baseload energy and more jobs, creating an even higher quality of life for Kansans, it will also create a new opportunities for the advancement of renewable energy. As new technologies emerge, the United States will become a leader in diversified energy production, which will help us attain energy independence and revive our economy.” –Eric Depperschmidt, president of Finney County Economic Development Corp.

About Sunflower
Sunflower Electric Power Corp. is a regional wholesale power supplier that operates a 1,275 MW system of wind, gas, and coal-based generating plants and a 2,300-mile transmission system for the needs of its six member cooperatives who serve more than 400,000 customers living in central and western Kansas. Visit Sunflower’s website at www.sunflower.net

Sunflower’s member cooperatives include Lane-Scott Electric Cooperative, Dighton; Pioneer Electric Cooperative, Ulysses; Prairie Land Electric Cooperative, Norton; The Victory Electric Cooperative Association, Dodge City; Western Cooperative Electric Association, WaKeeney; and Wheatland Electric Cooperative, Scott City, Kansas.

Today is a victory for Kansas common sense,” said Tiahrt. “After a year and a half of delayed Kansas jobs and lost economic opportunities for our state, I am pleased an agreement has been reached that will allow new electrical generating power to be produced in Western Kansas. I commend the tireless efforts by Sunflower Electric Power Corporation, the Kansas Chamber of Commerce, our rural electric cooperatives and state senators and representatives who remained committed to securing more electrical generating capacity in Kansas. I am pleased Sunflower Electric and Governor Parkinson were able to reach an agreement that will be good for our state.

The compromise allows Sunflower Electric Power Corp. to build one 895-megawatt coal-fired power plant near Holcomb, instead of two 700-megawatt plants that were repeatedly blocked by Kathleen Sebelius when she was governor.

In exchange for the go-ahead, Sunflower will build more wind turbines and agree to more pollution controls and a greater investment in energy efficiency.

“We have been at an energy impasse for the past couple of years,” said Parkinson, a Democrat. “I thought it was time to bring an end to that impasse.”

The game-changing deal came on Parkinson’s sixth day in office and as lawmakers were preparing yet another attempt to overrule Sebelius’ veto of legislation to authorize the plants.

Parkinson’s compromise elated Sunflower executives and plant supporters, surprised most lawmakers and disappointed environmental groups.

“Today, Kansas took a big step backwards,” said Sierra Club spokeswoman Stephanie Cole in a statement. “We cannot build new coal plants and claim to want to slow global warming at the same time.”

Parkinson said he reached out to Sunflower soon after he was sworn in to replace Sebelius a week ago. He explained that he was frustrated by the political stalemate that saw the coal issue derailing efforts to encourage renewable energy. He said a little coal and a lot of environmental legislation was better than nothing.

However, the agreement doesn’t ensure the plant will be built. Sunflower must lock in the financing. Its largest partner — Tri-State Generation and Transmission of Denver — said last month that it would be reconsidering its participation, in part because of the political stalemate in Kansas.

Also, new carbon regulations from Congress could steeply increase the cost of coal plants.

Sunflower CEO Earl Watkins said Monday that the compromise would allow his company to build a plant it could finance. He said the new plant would meet any new environmental regulations.

“He’s the one who reached out to us,” Watkins said of Parkinson. “We have a hands-on governor, one that I’m proud of.”

The smaller plant will produce carbon emissions of 6.67 million tons a year, compared with the 10.7 million tons projected to be emitted by the original two-plant project.

Of the 895 megawatts, 200 will serve customers in western Kansas.

As part of the agreement, Sunflower will significantly bolster its investment in wind energy, close two old oil-fired plants in Garden City, increase its use of biofuels, build two

transmission lines to carry power west, and dedicate 1 percent of gross sales to energy efficiency programs.

The compromise is contingent on lawmakers passing legislation requiring utilities to use more renewable energy, giving incentives to property owners with wind turbines or solar panels, and mandating new energy efficiency standards for state buildings and vehicles.

Legislative leaders said they expected lawmakers to approve such legislation quickly.

There’s not much not to like,” said House Speaker Mike O’Neal.

O’Neal said Parkinson may have realized that lawmakers were close to overriding Sebelius’ veto of legislation to resurrect the plants.

“We felt like the momentum was finally moving in our direction,” he said.

Governor Parkinson And Sunflower Electric Agree To New Energy Plan Kansas To Take A Significant Step Forward On Renewable Energy Policy

Governor Mark Parkinson, together with Sunflower Electric Power Corporation President and CEO, Earl Watkins, have announced a comprehensive energy plan to encourage the production of more renewable energy in Kansas.

“We’re bringing people together to create hundreds of jobs, increase our renewable energy production and ensure a comprehensive energy plan for our state,” said Governor Parkinson. “Prior to this agreement, the Legislature was at an impasse on energy issues. With this agreement, we can start to move forward.”

The current agreement will allow Sunflower to construct one 895 megawatt coal plant with an unprecedented level of carbon mitigation. This project is estimated to create more than 1,500 jobs at the peak of its construction.

The agreement between the Governor’s Administration and Sunflower Electric is contingent upon the Legislature’s passage of the Comprehensive Energy Package proposed by Parkinson and then-Governor Kathleen Sebelius in January.

“We are pleased to work with Governor Parkinson as this proposal meets the base load needs of the region and will promote the development of renewable resources in Kansas. The proposal will allow our out-of-state cooperative partners to participate in the project in a smaller way while preserving the 200 MW needed by Kansas cooperative and municipal utilities. Agreement provisions for wind, biomass and transmission development will promote renewable energy development in western Kansas,” said Earl Watkins, president and chief executive officer for Sunflower.

“I want to acknowledge every legislator, stakeholder and environmental advocate who have worked for the past 18 months on comprehensive energy policy for this state,” Parkinson continued. “I may not have a full term as Governor, but I do have a full agenda. We will be bringing people together – Republicans and Democrats; labor and business; public and private stakeholders – to move this state forward.”

“We appreciate the leadership shown by the Governor to recognize the need for base load power in the Sunflower system. This effort will move the project forward bringing much needed economic activity and jobs to Kansas,” said Watkins.

“This agreement meets the goals of our project, but will also address concerns of our coalition partners that the regulatory process is clear and follows the federal clean air act. The legislative proposal will move Kansas toward a comprehensive energy policy that utilizes all forms of generation, encourages the wise use of energy and balances concerns for cost and the environment.”

The survey reveals that 58 percent of Kansas voters consider the economy, jobs and the budget the most important issues facing the state.

―This comprehensive energy legislation is the result of a lot of hard work by both chambers,‖ said Senate President Steve Morris, R-Hugoton. ―We’ve lost thousands of jobs during this tough economic cycle, and I believe we simply must pass this legislation to provide the jobs that Kansans deserve, no matter where they live in our state.‖

Rep. Eber Phelps, D-Hays, agreed. “This bill will spur conservation and promote renewable energy as well as coal-fired power. Thus it will bring jobs to Kansas in all three of those sectors.”

The Holcomb Expansion Project, which will provide 2,500 jobs during construction and more than 300 permanent jobs, is viewed by many Kansans as an important solution to solving the economic and job issues. Almost twice as many voters support the construction of the project (51 percent to 26 percent) as oppose it. Forty percent of all voters and 56 percent of supporters indicate that their reason for support is based on the project’s job creation and private investment in the state.

―The members of my unions have been hit hard during this recession, and we support this legislation because it will put union members back to work,‖ said Rich Taylor, business manager for the Central and Western Kansas Building and Construction Trades Council. ―Our members possess the skills to build the infrastructure that will secure Kansas’ energy future, and we are ready to get to work.‖

What will no doubt be important to politicians is that unaffiliated voters decisively support construction of the project (46 percent to 23 percent) as do voters who regularly vote in primary elections (57 percent to 22 percent). Voters not only want the power plant expansion to be built in western Kansas, but they also expect their legislators to take action on the issue. Fully 56 percent said the legislature should overturn a gubernatorial veto of this issue, a percentage that reflects support from Republicans (66 percent overturn veto to 18 percent sustain) and Democrats (42 percent overturn veto to 37 percent sustain). Only 25 percent of total participants say the Governor’s veto should not be overridden.

Support for the project is not only broad, but has also developed depth. Support for the construction of the Holcomb expansion increases among those most informed. Sixty-four percent of Kansas voters were aware of the ongoing debate prior to the poll. In this group, support is higher (53 percent) than among the 34 percent who were unfamiliar with the issue (49 percent).

Other elected officials and business leaders voiced their support of the pending legislation:

―While I’m supportive of the economic development components of this legislation, the most important facet for my constituents is the reliability and security of our future energy supply.‖ – Senator Janis Lee, D- Kensington

―Many of our members have lost their jobs recently. This energy bill will not only be putting our members to work, it will also be keeping the lights on all across the sunflower state.‖– Garry Kemp, business manager of the Greater Kansas City Building & Construction Trades Council

―We’ve spent two years putting this bill together, and I am confident that the current bill reflects the need we have for more power and more jobs; but most importantly, it will show the world that Kansas is a rule-of-law-state that operates with regulatory certainty for all businesses.‖ – Speaker of the House Mike O’Neal, R-Hutchinson

―Our organization works hard every day to make Kansas the best state in America to do business. Energy costs and regulatory certainly are central to our mission to expand Kansas commerce and attract businesses to our state. This bill is imperative to help create a business climate and create jobs and economic growth for Kansas.‖ – Amy Blankenbiller, Kansas Chamber of Commerce president and CEO

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The Kansas Chamber, with headquarters in Topeka, is the statewide business advocacy group moving Kansas towards becoming the best state in America to do business. The Chamber represents small, medium and large employers.