KCP&L to delay wind farm promised in plant agreement

KANSAS CITY, Mo. -- Kansas City Power & Light says financing problems are forcing it to put off the construction this year of a 100-megawatt wind farm that is part of a deal to build its newest coal-fired power plant.

KCP&L and the Sierra Club announced a comprehensive energy plan last March where the environmental advocacy group said it would cease its objections to the Iatan 2 power plant, under construction near Weston, in exchange for the utility agreeing to build 400 megawatts of wind energy by 2012 and implement greater conservation and pollution-cutting strategies.

Great Plains Energy Inc., KCP&L's parent company, said in a regulatory filing that it was "committed to evaluating" the construction of additional wind farms in 2009 and later. Mike Chesser, Great Plains' chief executive officer, told The Kansas City Star that KCP&L's agreement with the Sierra Club would be met, including the full amount of required wind energy by 2012.

"Our reputation is on the line on this," Chesser said.

By going slowly on the second of its wind energy projects, the company is running counter to an industry trend of booming growth in wind farms. It also will likely forego federal wind energy tax credits that are scheduled to expire at the end of the year.

"There's a lot of interest in financing these projects," said Christine Real de Azua, a spokeswoman for the American Wind Energy Association. "This is going to be another strong year."

KCP&L built its first 100-megawatt wind farm in south-central Kansas last year. But the deferral of the company's 2008 wind project has raised questions of whether the company is truly committed to renewable energy and will ever build the remaining 300 megawatts.

"We are definitely concerned that this may put KCP[&]L in violation of the Sierra Club agreement," said Henry Robertson, an attorney for the organization."

The company decided to delay the wind farm in December but didn't announce its decision. Earlier this year, the company told the Missouri Public Service Commission that "subprime mortgages and related problems" had caused so much unease in the financial markets that the company couldn't get the financing it planned to use to build the wind farm.

KCP&L said it had wanted to issue "hybrid debt securities," which have characteristics of stocks and bonds and are sometimes viewed more favorably by debt-rating agencies.

Great Plains said the company isn't in financial straits, even as one rating agency, Standard & Poor's, has the utility on credit watch and the company's cost estimate for its energy plan has risen to $2 billion.

Consumer and environmental representatives say they're at a loss to understand the decision, given that other utilities are apparently not having trouble paying for the development of new wind farms.

The Missouri Office of the Public Counsel, which represents consumers, said it couldn't support "KCP&L's unilateral decision to cancel the second wind investment" without details of whether the company evaluated other ways to finance the project.

The Missouri Department of Natural Resources said in a regulatory filing that the company could have asked another party to build the wind farm and then sell it the electricity. That's a fairly common strategy in the industry and can result in cheaper power for customers.

The department also said KCP&L would have trouble building wind farms in the future, although the reasoning for that conclusion included information the utility asked to be withheld from the public. Officials may have been referring to a federal tax credit for wind farms, which is expiring in December.

Westar Energy Inc., the Topeka-based utility, plans to bring 300 megawatts of wind energy online by the end of the year, half from wind farms it is building and the other half purchased from other farms.

Spokeswoman Karla Olsen said those plans are moving forward as planned.

"No financing issues," she said.

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Information from: The Kansas City Star, http://www.kcstar.com