Washington (Platts)--28Apr2008

With the Kansas General Assembly set to reconvene April 30, Governor Kathleen
Sebelius is reviewing a final "compromise offer" from Sunflower Electric Power
Cooperative concerning two proposed coal-fired plants that would be built
under legislation she has vetoed twice.

Earlier this year, the governor, a Democrat, vetoed S.B. 327 and 148, similar
bills that would strip Kansas Department of Health and Environment Secretary
Roderick Bremby of his authority to reject Sunflower's air permit for the
plants. Bremby turned down Sunflower's permit in October, citing the potential
for the plants to increase carbon dioxide emissions.

His decision, in spite of the lack of state or federal laws curbing CO2,
emboldened environmentalists who have urged similar actions by regulators in
other states where new coal plants are planned.

Kansas lawmakers easily passed both bills. While the Senate has more than
enough votes to override gubernatorial vetoes, the House is one vote short of
the 84 it needs. Republicans hold a majority in both legislative chambers.

Under the compromise presented to Sebelius in an hour-long, face-to-face
meeting on April 24, Sunflower still would construct two plants, but their
generating capacity would be reduced to 600 MW apiece, a 200-MW reduction from
the original plan. Also, the co-op would accelerate development of wind
resources and energy efficiency programs.

Sunflower spokesman Steve Miller told Platts on Friday that key lawmakers
recently approached the co-op "and asked if there's anything we could do to
improve the project in their [plant opponents'] eyes." Sunflower and its two
partners in the project, Midwest Energy and Tri-State Generation and
Transmission, agreed to make some changes.

If the deal is accepted by Sebelius, "we would have a reduction in the fees we
would otherwise have because they're smaller units," said Miller. But
Sunflower would rather "have something than have a whole lot of nothing."

Brittany Stiffler, the governor's press secretary, said her boss has not made
a decision on the offer, but probably would do so before April 30. In a
statement, Sebelius said her office "did confirm that many of the elements" in
the proposal "are similar to the two Senate bills which I previously vetoed."