House Status:
Senate Status:
Senate Status:
Minutes for HB2609 - Committee on Taxation
Short Title
Extending the property tax exemption for pollution control devices and peak load plants of independent power producers and certain electric public utility property.
Minutes Content for Thu, Feb 15, 2024
Chairperson Smith opened the hearing for HB2609.
Adam Siebers, Assistant Revisor, provided an overview for HB2609 that extends the property tax exemptions for certain independent power producers and certain public utility property. (Attachment 1) Mr. Siebers responded to questions from Committee members.
Kathleen Smith, Kansas Department of Revenue, provided an overview on the fiscal note for HB2609 stating there are no peak load electric generation facilities or pollution control devices for peak load electric generation facilities exempt under 79-257 or 79-258. If any of the facilities are developed in the future, they would be exempt from taxation for ten and twelve taxable years. The Kansas Department of Revenue is unable to estimate the fiscal impact at this time. Ms. Smith responded to questions from Committee members.
Proponents:
Mike Morley, Director of Corporate Communications & Government Affairs, Midwest Energy, Inc., testified as a proponent for HB2609 noting the background is Kansas needs more electrical generation particularly dispatchable generation capacity. Kansas is part of a 14 state-compact called the Southwest Power Pool and is the grid which operates the generation and transmission for fourteen states and the entire state of Kansas. S&P forecasts for year 2028 shows peak demand will increase by more than 4,000 megawatts and at the same time total generating capacity is forecast to decline 1,400 megawatts. HB2609 as drafted looked to have each category of property with the same number of years exempt depending on which of the categories it fits into. He noted after introducing HB2609, Representative Schreiber introduced HB2768 which amended the same provisions of HB2609 but made all categories exempt for 10 years. The amendment was crafted to focus on the tax exemption provisions and includes tax exemptions for equipment used or electric generation from nuclear energy. HB2609 when amended will ensure property tax exemptions are uniform for all electric public utility property. (Attachment 2) Mr. Morley responded to questions from Committee members.
Representative Schreiber, 60th District, testified as a proponent for HB2609 that begins the process of standardizing the property tax exemption for new electric generation and pollution control equipment. The National Electric Reliability Corporation (NERC) put out a report recently that stated in the next ten years or by 2033, there will be a need for 83 gigawatts of electricity new generation to be built in the United States. He noted 83 gigawatts of electricity is equivalent to 69 Wolf Creek plants across the United States. The reason for this much new generation is that several power plants are reaching the end of their operational life, plus there is new demand. Representative Schreiber offered an amendment to HB2609 that provides a 10-year property tax exemption regardless of who is building the generation. The amendment strikes any difference between who builds the generation and provides the 10-years exemption uniformly across all generation. Representative Schreiber responded to questions from Committee members. (Attachment 3) (Attachment 4)
Reagan McCloud, Manager of Government Relations, Kansas Electric Cooperatives, Inc., testified as a proponent for HB2609 that simplifies current law pertaining to electric public utility property by exempting all such property from property tax liability for ten years. The actual growth in the renewable industry is a catalyst for the need of the power plants an issue in HB2609. He noted as the industry grows, so does the need to increase the build-out of peer plants. As our economy becomes more electrified and the demand that utilities are tasked with covering becomes greater, the fact that this 10-year exemption to these plants will keep the cost of building down as well as increase the utility's ability to guarantee the reliability of the grid. Mr. McCloud responded to questions from Committee members.(Attachment 5)
Laura Lutz, Director, Government Affairs, Evergy, testified as a proponent for HB2609 stating they serve more than 1.6 million customers throughout Kansas and Missouri and has a variety of electric generating sources in its generation fleet including coal, natural gas, and nuclear power plants, as well as wind and solar facilities. The legislation would provide consistency regarding the length of property tax exemptions across all sources of generation. She noted Evergy has noticed in its service territory, economic development growth opportunities are seen. There are reshoring companies, data centers that want to locate in our service territory, and advanced manufacturers, noting there is going to be a need for more generation to meet that electric demand. A base load natural gas plant is probably the next type of generating unit that is currently being looked at. Having consistency and uniformity around the timeline for property tax exemptions on various sources of generation assists a utility with planning, and also benefits customers by reducing overall cost when adding needed generation facilities. Ms. Lutz responded to questions from Committee members. (Attachment 6)
There was no testimony submitted as neutral or opponent to HB2609.
Chairperson Smith closed the hearing for HB2609.
