Boston (Platts)--21Mar2008

Kansas Governor Kathleen Sebelius on Friday vetoed a bill (SB 327) that
would have barred the state's Secretary of Health and Environment from denying
an air permit to a coal-fired power plant because of the project's greenhouse
gas emissions.

The governor also signed an executive order establishing the Kansas
Energy and Environmental Policy Advisory Group to help guide the state in
developing a greenhouse-gas reduction strategy.

The Kansas Senate earlier this month approved SB 327 by a veto-proof
margin of 37-7, but the state House passed it in a 75-47 vote -- short of the
two-thirds votes needed to override Sebelius' expected veto. Legislators have
30 days to vote on an override.

In addition to barring the health secretary from denying an air permit
over GHG concerns grounds, the bill would establish a mandatory renewable
portfolio standard of 10% in 2012, 15% in 2016, and 20% in 2020.

Sebelius in January set a voluntary renewables goal of 10% in 2010 and
20% in 2020. SB 327 is supported by allies of Sunflower Electric Power, whose
$3.6-billion plan to build two 700-MW coal units in western Kansas stalled in
October when Secretary of Health and Environment Roderick Bremby denied an air
permit over concern about the projects carbon emissions.

"We know that greenhouse gases contribute to climate change," Sebelius
said in a statement. "As an agricultural state, Kansas is particularly
vulnerable. Therefore, reducing pollutants benefits our state not only in the
short term, but also for generations of Kansans to come."

Sebelius added that coal is becoming more expensive and that bills
introduced in Congress to cap carbon emissions "would have the net impact of
taxing carbon. If any of the proposals are adopted, utility companies and
their customers will pay far more for energy which produces carbon. It will
also require spending billions on equipment to clean the atmosphere as
thoroughly as possible. Building additional coal plants now is likely to
create a significant economic liability for Kansas in the future."