Iowa Public Television

 

State Senator Jack Kibbie and Bruce Rastetter of Hawkeye Renewable Fuels

posted on October 10, 2005

Borg: IOWA'S CORN, SOYBEANS AND WIND... WHAT ROLE DO THEY HAVE IN SUPPLYING THE NATION'S ENERGY NEEDS? WE'LL QUESTION STATE SENATOR JACK KIBBIE AND BRUCE RASTETTER OF HAWKEYE RENEWABLE FUELS, ON THIS EDITION OF "IOWA PRESS." FUNDING FOR "IOWA PRESS" WAS PROVIDED BY "FRIENDS," THE IOWA PUBLIC TELEVISION FOUNDATION; AND BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS.

ON STATEWIDE IOWA PUBLIC TELEVISION, THIS IS THE FRIDAY, OCTOBER 7 EDITION OF "IOWA PRESS." HERE IS DEAN BORG.

Borg: AS IT RELATES TO ENERGY, THE QUESTION IS WHERE DO WE GO FROM HERE. AND PERHAPS A QUICK FOLLOW UP: HOW SOON CAN WE GET THERE? AS WINTER APPROACHES, THE QUESTION SEEMS TO BE WHETHER THE COLD OR HEATING FUEL PRICES WILL COST THE MOST SHIVERS. THAT DILEMMA COMES AT THE SAME TIME AS GASOLINE PRICES ARE NEARLY TWICE AS HIGH AS THEY WERE A YEAR AGO AT THIS TIME. AS SOLUTIONS TO THOSE QUESTIONS ARE DEVELOPED, THE IOWA LEGISLATURE AND THE PRIVATE SECTOR WILL BE INVOLVED. REPRESENTATIVES OF BOTH ARE AT THE IOWA PRESS TABLE TODAY. BRUCE RASTETTER OF HAWKEYE RENEWABLE FUELS IN IOWA FALLS IS IN THE BUSINESS OF PRODUCING ALTERNATIVE FUELS. AT THE IOWA STATEHOUSE, EMMETSBURG SENATOR JACK KIBBIE HAS PUSHED ENERGY RELATED LEGISLATION. GENTLEMEN, NICE TO HAVE YOU AT THE "IOWA PRESS" TABLE TODAY.

Kibbie: THANK YOU FOR INVITING US.

Rastetter: THANK YOU FOR INVITING US.

Borg: AND ACROSS THE TABLE: "DES MOINES REGISTER" POLITICAL COLUMNIST DAVID YEPSEN AND "ASSOCIATED PRESS" SENIOR POLITICAL WRITER MIKE GLOVER.

Glover: SENATOR KIBBIE, AS DEAN MENTIONED IN HIS INTRODUCTION, GAS PRICES ARE ON THEIR WAY BACK UP AGAIN. THEY'RE BACK UP NEAR $3. IS THERE ANYTHING THAT THE LEGISLATURE OR THE GOVERNOR CAN DO AT A STATE LEVEL TO INTERFERE WITH THAT, OR ARE WE JUST POWERLESS?

Kibbie:, WELL, MIKE, THE LEGISLATURE NEEDS TO PUT PROGRAMS IN THAT WILL SAVE IOWANS MONEY ON THEIR ENERGY COSTS AND TO CREATE JOBS. AND ONE OF THOSE WOULD BE FOR US TO REQUIRE ETHANOL IN EVERY GALLON OF GASOLINE USED ON IOWA'S HIGHWAYS, AND BIODIESEL IN ALL THE DIESEL VEHICLES IN THIS STATE. AND THAT WOULD BE EASY TO DO, AND I PREDICT THAT THAT WILL HAPPEN IN '06.

Glover: THE ETHANOL MANDATE HAS BEEN DEBATED IN THE PAST. WE NOW HAVE A SITUATION WHERE THE LEADING REPUBLICAN GUBERNATORIAL CANDIDATE, JIM NUSSLE, HAS ADVOCATED AN ETHANOL MANDATE. DOES THAT MAKE IT A SLAM DUNK AT THE LEGISLATURE?

Kibbie: I DON'T THINK IT MAKES IT A SLAM DUNK, BUT I THINK IN A BIPARTISAN WAY, WITH A 25/25 SENATE, THE REPUBLICAN LEADERS AND DEMOCRAT LEADERS OUGHT TO GET BEHIND THIS PROGRAM AND PUT OUT THERE. I'VE GOT 20 DEMOCRATIC SENATORS IN '05 THAT WILL VOTE FOR THAT BILL. IF WE PUT IT OUT OF COMMITTEE AND ALLOW IT TO BE DEBATED, WHY, IT WILL PASS WOULD BE MY PREDICTION.

Glover: MR. RASTETTER, AT WHAT POINT DO GAS PRICES AND ENERGY PRICES IN TOTAL BEGIN TO DAMPEN THE STATE'S ECONOMY? AT WHAT POINT DO CONSUMERS HAVE TO PULL BACK THEIR SPENDING BECAUSE THEY'RE SPENDING SO MUCH ON ENERGY?

Rastetter: I THINK YOU'RE SEEING SOME OF THAT TODAY. I THINK THE OPPORTUNITY WITH ETHANOL AND BIODIESEL IS THAT IT'S CHEAPER AT THE PUMP. I MEAN IT'S CHEAPER FOR CONSUMERS TO BUY ETHANOL BLEND AT THE 10-PERCENT RATE. AND IF E85 WAS MORE AVAILABLE IN IOWA, IT WOULD HELP LOWER THAT COST OF GASOLINE AS WELL.

Yepsen: SENATOR KIBBIE, WHY AREN'T WE SEEING MORE BENEFIT FROM ETHANOL? IN THE LAST FEW WEEKS, THE PRICE OF THE GRAIN ALCOHOL THAT GOES INTO ETHANOL HAS RISEN DRAMATICALLY. NOW, WE HAVEN'T HAD ANY HURRICANES KNOCKING OVER CORNFIELDS OR ETHANOL FACTORIES. IS THERE PRICE GOUGING GOING ON BY THE ETHANOL INDUSTRY?

Kibbie: WELL, FROM WHAT I CAN FIND OUT, THAT'S NOT THE CASE, THAT THE ETHANOL AND -- IS BASED MORE ON THE GASOLINE PRICE. THE DDGs THAT COME FROM THE PLANTS IS BASED MORE ON THE CORN PRICE. BUT LAST MARCH, OF COURSE, THEY WERE LOSING MONEY. ETHANOL WAS ABOUT $1.20. NOW IT'S AROUND $2.50. AS I WAS DRIVING DOWN HERE TODAY THROUGH HUMBOLDT, E85 WAS $2.19 A GALLON AND E10 WAS $2.70. AND, OF COURSE, THE NEXT GRADE UP WAS $2.80. SO WE HOPE NOBODY IS GETTING GOUGED ON THE PRICE OF ETHANOL. I'M CERTAINLY NOT AN EXPERT ON THAT, BUT IT CERTAINLY NEEDS TO BE ADDRESSED. AND WE OUGHT TO BE USING MORE OF IT. E85 -- IT'S INSANE THAT WE DON'T HAVE AN E85 RETAIL OUTLET IN EVERY COUNTY IN THIS STATE. WE'VE GOT 16 RETAIL OUTLETS IN THIS WHOLE STATE.

Yepsen: THE QUESTION, SENATOR, ALSO INVOLVES GASOLINE. I ASKED YOU ABOUT ETHANOL. NOW I WANT TO KNOW ABOUT GASOLINE. IS THERE PRICE GOUGING GOING ON BY THE PETROLEUM COMPANIES?

Kibbie: WELL, WHEN GAS WENT UP 50 CENTS BECAUSE OF THE HURRICANE, IT SEEMS TO ME SOMEBODY WAS TAKING ADVANTAGE OF THAT TOO EARLY. IT WASN'T A CASE OF BEING SHORT SUPPLIED, I'M TOLD. THERE WAS PLENTY OF GAS. IT WAS JUST AN OPPORTUNITY TO GET MORE MONEY OUT OF THE CONSUMERS.

Yepsen:, WELL, SHOULDN'T THE GOVERNOR OR THE LEGISLATURE OR SOMEBODY IN STATE GOVERNMENT BE INVESTIGATING THIS, GIVEN THE QUESTION THAT MIKE ASKED EARLIER ABOUT THE CRIPPLING EFFECT ON OUR STATE ECONOMY? IS THERE PRICE GOUGING GOING ON OR NOT? WHO CAN TELL US THAT DEFINITIVELY?

Kibbie: I DON'T KNOW. BUT THE FISCAL COMMITTEE, I KNOW, MET. MAYBE YOU WERE THERE AT THE MEETING. AND I KNOW THERE WERE SOME QUESTIONS ASKED ABOUT THAT, AND I'M ASSUMING THAT THERE'S BEING SOME STUDIES DONE ON THAT. AND I KNOW THAT IS BEING TALKED ABOUT AROUND THE COUNTRY, NOT JUST HERE IN IOWA.

Yepsen: MR. RASTETTER, DO YOU THINK THERE'S PRICE GOUGING GOING ON HERE BY EITHER ETHANOL OR PETROLEUM?

Rastetter: I CERTAINLY KNOW THERE'S NOT ON THE ETHANOL SIDE. THE CHALLENGE WITH THIS COUNTRY IS THAT WE DON'T HAVE ANY EXCESS CAPACITY IN REFINERIES. SO ANYTIME THERE'S AN INTERRUPTION WITH THAT, WHETHER IT BE WITH THE HURRICANE OR WHETHER IT BE WITH THE PIPELINE OR JUST A PLANT SHUTTING DOWN, YOU'RE GOING TO HAVE EMOTIONAL REACTION. AND I THINK THAT'S ONE OF THE OPPORTUNITIES TO CREATE OIL REFINERIES, I.E., ETHANOL PLANTS IN IOWA AND BIODIESEL, AND HELP MINIMIZE THAT, AND IT WOULD BECOME MORE OF A SIGNIFICANT SUPPLY ISSUE --

Yepsen: WELL, WHY DO YOU THINK ETHANOL HAS SHOT UP SO MUCH? LIKE I SAID, WE HAVEN'T HAD ANY HURRICANES KNOCKING DOWN ANY CORNFIELDS OR ETHANOL PLANTS.

Rastetter: TO ILLUSTRATE THAT FOR YOU, LAST YEAR WE WERE SELLING ETHANOL FOR $1.70. AS GASOLINE WENT UP 50 CENTS, ETHANOL ACTUALLY WENT DOWN 60 CENTS IN FEBRUARY AND MARCH. AND AS SUMMER DRIVING HAPPENED, ETHANOL PRICES INCREASED BACK UP TO -- TODAY YOU CAN SEE THE FUTURES MARKET A LITTLE OVER $2.40. BUT CLEARLY WE'RE REFLECTIVE OF THE PRICE OF GASOLINE.

Borg: MR. RASTETTER, I'LL STAY WITH YOU FOR JUST A MOMENT, BUT I WANT TO FOLLOW UP ON A STATEMENT THAT WE JUST HEARD FROM SENATOR KIBBIE, AND THAT IS THAT IT'S INSANE, I THINK WAS THE WORD HE USED, THAT EVERY COUNTY DOESN'T HAVE AN OUTLET FOR AN E85 PUMP, 85 PERCENT ETHANOL. BUT ISN'T THAT THE RESPONSIBILITY OF THE PRIVATE SECTOR, AND THEY WOULD BE THERE IF THE MARKET WERE THERE?

Rastetter: WELL, I THINK PART OF WHAT WE'VE SEEN A REFLECTION OF THAT IS THAT MINNESOTA HAS 100 E85 STATIONS. THAT STATE'S DNR HAS BEEN RECEPTIVE TO HELPING BUSINESS MOVE THAT ALONG, AND I DON'T THINK YOU'VE HAD THAT HAPPEN IN IOWA. I THINK YOU HAVE -- WE HAVE SOMETHING LIKE 18 STATIONS. AND ONE OF THE REASONS MINNESOTA HAS MORE E85 STATIONS IS THAT THEY HAVE MANDATED THE USE OF ETHANOL. SO THAT'S FREED UP A WHOLE SET OF TANKS THAT CAN HAVE E85 GO IN THOSE. THAT ALLOWS THE PUBLIC TO HAVE ACCESS TO THAT RATHER THAN TRYING TO CREATE THE WHOLE NEW INFRASTRUCTURE THAT'S GOING TO SUPPORT THAT.

Glover: SENATOR KIBBIE, WHAT CAN THE STATE DO, OTHER THAN MANDATING ETHANOL USE STATEWIDE, TO ENCOURAGE THE USE OF E85?

Kibbie: THE DNR AND THE LIABILITY INSURANCE COMPANIES FOR THE PETROLEUM MARKETERS HAVE TOLD ME THAT THEY'RE GOING TO LAY OFF THE REQUIREMENTS FOR TWO YEARS TO LET THIS THING WORK OUT. WHAT WE NEED TO DO, IN MY OPINION, IS IF WE PASS THE RENEWABLE FUEL STANDARD, THAT MEANS THAT THE $5 MILLION THAT THE STATE IS NOW PAYING TO PETROLEUM MARKETERS TO SELL ETHANOL -- 10 PERCENT ETHANOL OVER 60 PERCENT, THAT'S $5 MILLION. I JUST CHECKED THAT OUT WITH THE FISCAL BUREAU. AND WE NEED TO -- I WOULD LIKE TO SEE US PLOW THAT $5 MILLION BACK TO THOSE SAME PEOPLE TO GET A RETAIL OUTLET IN EVERY COUNTY.

Borg: SENATOR KIBBIE, I WANT TO MOVE ON TO HEATING COSTS. SHOULD THE STATE BE MORE AGGRESSIVE IN HELPING LOW INCOME PEOPLE MAKE THEIR HOMES BE MORE ENERGY EFFICIENT?

Kibbie: YES, THEY SHOULD. AND THERE WILL BE AN ATTEMPT IN THE LEGISLATURE TO APPROPRIATE MORE MONEY FOR L.I.H.A.P. AND LOW INCOME FAMILIES. AND THERE'S OTHER LEGISLATION, OF COURSE, THAT WE COULD DO TO HELP STABILIZE THAT. I MEAN EFFICIENT -- EFFICIENT HOUSING AND EFFICIENT HOMES AND TO CONSERVE ON ENERGY HAS GOT TO BE OUR GOAL.

Yepsen: SENATOR, EVERY YEAR WE HEAR THIS. THERE'S NOT ENOUGH MONEY FOR THE LOW INCOME HEATING ASSISTANCE PROGRAM, SO WE HAVE TO PUT MORE TAX MONEY -- FEDERAL MONEY INTO HELPING POOR PEOPLE PAY THEIR ENERGY BILLS. WE'RE HEARING THAT AGAIN THIS YEAR. WHY -- AT WHAT POINT DO POLICYMAKERS START HELPING PEOPLE WINTERIZE AND WEATHERIZE AND RETROFIT THEIR HOMES AS OPPOSED TO JUST PAYING THEIR LIGHT BILLS FOR THEM?

Kibbie: I THINK THAT'S THE WAY WE OUGHT TO GO. WE OUGHT TO START GIVING PEOPLE TAX INCENTIVES TO UPGRADE THEIR HOMES AND MAKE THEM MORE ENERGY EFFICIENT. I THINK THAT WOULD BE AN EXCELLENT OPPORTUNITY. WE OUGHT TO DO THAT.

Yepsen: MR. RASTETTER, I WANT TO ASK YOU ABOUT SOME OF THE CRITICISMS THAT ARE MADE OF ETHANOL, AND YOU'VE HEARD A LOT OF THEM. THE FIRST ONE IS THAT IT TAKES MORE ENERGY TO MAKE IT THAN IT PRODUCES IN YOUR CAR. TRUE OR FALSE?

Rastetter: THAT'S FALSE. I THINK ONE OF THE -- ONE OF THE MYTHS IN THE INDUSTRY IS EXACTLY THAT. THAT'S A TWENTY-YEAR-OLD STUDY. IT DOESN'T TAKE INTO ACCOUNT THE ADVANCES IN BIOTECHNOLOGY, IN CORN PRODUCTION, THE INCREASE THAT WE HAVE EVERY YEAR ON THAT. IT DOESN'T TAKE INTO ACCOUNT THE EFFICIENCIES THAT HAVE HAPPENED IN THE NEW ETHANOL PLANTS TO REUSE ENERGY. SO THAT'S A TWENTY-YEAR OLD STUDY. ACTUALLY THE NUMBERS THAT RECENTLY WE'VE SEEN IS THAT FOR EVERY GALLON OF ENERGY THAT IT COSTS TO PRODUCE ETHANOL, YOU PRODUCE 1.8 GALLONS OF ETHANOL. SO IT'S ALMOST A 2-TO-1 OPPORTUNITY TO CREATE RENEWABLE RESOURCES THAT WAY.

Yepsen: COULD THE ETHANOL INDUSTRY STAND ON ITS OWN WITHOUT THESE STATE TAX SUBSIDIES AND FEDERAL TAX SUBSIDIES?

Rastetter: WELL, DAVID, ONE OF THE THINGS THAT'S ALSO MISUNDERSTOOD IS THE 51-CENT EXCISE TAX THAT ISN'T PAID ON ETHANOL GOES TO THE BENEFIT OF THOSE PURCHASING IT. SO THAT'S ONE OF THE REASONS WHY YOU'RE SEEING THAT CHEAPER AT THE PUMP THAN 10 CENTS. WE'RE NOT RECEIVING THAT FROM THE PLANT. THE PEOPLE THAT BUY THAT PAY LESS. AND AT SOME POINT, YES, IT WILL. I THINK ONE OF THE OPPORTUNITIES NOW THAT REAL INDUSTRY IS BEING CREATED IS THERE'S NEW TECHNOLOGY THAT WILL ALLOW THE OIL TO BE TAKEN OFF OF ETHANOL TO CREATE BIODIESEL WITH THAT. SO THAT WILL BE A NEW OPPORTUNITY THAT WILL HELP LOWER THE COSTS IN THESE PLANTS IN PRODUCING IT.

Yepsen: HOW WORRIED ARE YOU THAT WE'RE BETTING ON THE WRONG THING HERE? NUMBER ONE, ARE YOU WORRIED ABOUT COMPETITION FROM BRAZILIAN ETHANOL? NUMBER TWO, CORN PRODUCERS COULD FIND THAT IT'S CHEAPER TO MAKE ETHANOL SWITCH GRASS.

Rastetter: YOU KNOW, I THINK THE WHOLE RENEWABLE SPECTRUM IS GOING TO HAVE OPPORTUNITIES. WHETHER IT'S WIND, BIOMASS, BIODIESEL, THE BLEND OF THOSE ULTIMATELY CAN HELP PRODUCE ABOUT 20 PERCENT, 25 PERCENT OF THE U.S. ENERGY NEEDS. AND, SURE, I'M WORRIED ABOUT THE INDUSTRY GETTING LARGE ENOUGH. I THINK THAT'S WHY IT'S IMPORTANT FOR THE GOVERNMENT TO HAVE THE SUPPORT ON THE 7.5-BILLION-GALLON ENERGY BILL THAT CAME OUT, TO CONTINUE TO HAVE SUPPORT OF E85 VEHICLES AND HYBRID VEHICLES, WHERE YOU'LL HAVE ETHANOL GOING INTO HELP PRODUCING THAT AND MAKING SURE THAT, IF IT'S IN THE GREATER PUBLIC GOOD, THAT AN EMERGING INDUSTRY HAS THAT. I THINK IT'S NO DIFFERENT THAN THE MILITARY SUPPORT THAT WE HAVE IN THE MIDDLE EAST ENSURE THE OIL SUPPLY. IT'S GOVERNMENT SUPPORTING SOMETHING THAT'S RENEWABLE HERE THAT'S GOING TO MAKE A DIFFERENCE IN OUR ECONOMY AND SAVE MONEY FOR CONSUMERS.

Glover: SENATOR KIBBIE, I'D LIKE TO TAKE A COUPLE OF IDEAS TO YOU THAT HAVE BEEN FLOATED AND SEE WHAT YOUR REACTION IS. ONE IS SOME KIND OF A DIRECT GOVERNMENT SUBSIDY FOR FUEL-EFFICIENT VEHICLES. AT WHAT POINT CAN THE GOVERNMENT HELP PEOPLE MAKE A DECISION TO GO TO HYBRIDS AND OTHER EFFICIENT FUELS?

Kibbie: WELL, I'M GOING TO RECOMMEND -- I'VE ALSO -- I'VE ALREADY ASKED FOR THE BILL DRAFT. THIS WILL TAKE THE SALES TAX OFF OF ALL FLEX-FUEL VEHICLES AND HYBRID VEHICLES. I THINK THAT WOULD BE A GREAT START.

Glover: HOW MUCH WOULD THAT COST?

Kibbie: I THINK IN THE NEIGHBORHOOD OF $3 MILLION. IF WE BUY A LOT MORE VEHICLES, OF COURSE, IT WILL COST MORE. WE'VE GOT 94,000 FLEX-FUEL VEHICLES IN IOWA NOW THAT WILL BURN E85. YOU'VE GOT 12,000 OF THEM IN POLK COUNTY AND NO RETAIL PLACE FOR THEM TO BUY IT. YOU GOT 300 OF THEM IN MY RURAL COUNTY.

Glover: THE SECOND SUGGESTION I'VE HEARD IS SUSPENDING THE GAS TAX.

Kibbie: I DON'T THINK THAT WILL HAPPEN. I JUST THINK THE ROAD SITUATION THE WAY IT IS, THE ONLY PLACE I SEE ANY MONEY SPENT ON HIGHWAYS IS 235 --

Glover: THAT'S ANOTHER SHOW, SENATOR. THE THIRD THING THAT I'VE HEARD IS THAT MAYBE AS WE SPEAK, THE LEGISLATURE IN NEW MEXICO IS CONSIDERING A PROPOSAL TO GIVE CONSUMERS A DIRECT SUBSIDY TO HELP WITH HIGH ENERGY COSTS. DOES THIS STATE HAVE THE MONEY TO DO THAT?

Kibbie: NO, WE DON'T. I THINK THAT'S PRETTY SIMPLE. I DON'T THINK WE DO. I THINK WE NEED TO ADDRESS VARIOUS COSTS AND TO GIVE PEOPLE REASON TO BUY THESE VEHICLES. AND WITHOUT A PLACE TO BUY THE FUEL, THERE'S NOT A LOT OF GOOD REASON. I THINK WE CAN TAKE THE $5 MILLION THAT WE'RE SUBSIDIZING THE PETROLEUM MARKETERS TO SELL AN IOWA PRODUCT. WHAT WE DO GOOD IN IOWA IS RAISE CORN. WHAT WE LACK IN IOWA IS A PRICE FOR CORN. AND ETHANOL WILL HELP GET THAT PRICE UP WHERE PEOPLE CAN MAKE A LIVING.

Glover: MR. RASTETTER, WOULD ANY OF THOSE SUGGESTIONS SPUR YOUR INDUSTRY SIGNIFICANTLY?

Rastetter: WELL, I THINK ONE OF THE THINGS THAT YOU SEE IS A LOT OF THE RETAILERS ONLY HAVE TWO TANKS AT THE GAS STATION, ONE FOR UNLEADED, ONE FOR E10. BY MANDATING ETHANOL, YOU'LL FREE UP THOSE OTHER TANKS, SO THERE WOULD BE LESS NEED FOR STATE SUPPORT AT HELPING PROVIDE THAT INFRASTRUCTURE. SO THAT CLEARLY IS ONE OF THE OPPORTUNITIES SO THAT E85 WOULD BE AVAILABLE. BEYOND JUST BUYING AN E85 VEHICLE, YOU ACTUALLY CAN CHANGE EXISTING VEHICLES TO BE FLEX-FUELED VEHICLES. THE COST IS ABOUT $400 A VEHICLE TO MAKE THAT HAPPEN.

Yepsen: MR. RASTETTER, WE'VE TALKED A GREAT DEAL ABOUT ETHANOL HERE. I WANT TO SWITCH TO SOME OTHER ALTERNATIVE FUELS. BIODIESEL, WHAT SHOULD THE STATE BE DOING, IF ANYTHING, TO FOSTER CREATION OF BIODIESEL -- THE USE OF BIODIESEL?

Rastetter: THE USE OF BIODIESEL, I THINK THAT YOU'RE STARTING TO SEE THAT, WHETHER IT'S FROM JOHN DEERE OR JUST THE OPPORTUNITY TO HAVE MORE OF THAT BLENDED IN STATE VEHICLES. HAVING THE BUSINESS CLIMATE TO ACCOMPLISH THAT, IT WILL NATURALLY HAPPEN, AS WE'VE SEEN IN THE ETHANOL BUSINESS. THE DISTRIBUTION SYSTEM ISN'T AS CLEAR IN BIODIESEL AS IT IS IN ETHANOL AROUND THE COUNTRY. BUT THE OPPORTUNITY IS THERE TO NOT ONLY CREATE BIODIESEL OUT OF SOY OIL, BUT ALSO OUT OF ANIMAL FAT, CORN OIL, AND MULTIPLE SOURCES OF PRODUCTS THAT WE HAVE IN IOWA.

Yepsen: AND WHAT DOES THE STATE NEED TO BE DOING TO HELP FOSTER THE WIND ENERGY INDUSTRY?

Rastetter: WELL, THE WIND ENERGY -- AND SENATOR KIBBIE AND THE SENATE LAST YEAR WERE CERTAINLY SUPPORTIVE OF MAKING THAT HAPPEN. WE HAVE A 1-CENT KILOWATT HOUR TAX CREDIT FOR LARGE WIND. WE HAVE A 1.5-CENT PER KILOWATT HOUR TAX CREDIT FOR SMALL WIND. AND I THINK THE STATE ON -- WHAT WE SAW AS THE OPPORTUNITY THERE IS TO ABILITY TO EXPORT WIND ENERGY TO OTHER STATES. THE TRANSMISSION BECOMES A CHALLENGE. THE STATE NEEDS TO WORK WITH OTHER STATES TO MAKE SURE THAT WE CAN TRANSPORT WIND AND EXPORT RENEWABLES TO CHICAGO, KANSAS CITY, OTHER CITIES. AND SO THE OPPORTUNITY TO ENCOURAGE THAT TRANSMISSION TO BE EASY BETWEEN THE UTILITY COMPANIES AND ALSO IOWA TO HAVE A GREATER PORTION OF ITS ENERGY NEEDS BY WIND.

Borg: TRANSMISSION LINES?

Rastetter: WE HAVE ABOUT 3 PERCENT TODAY.

Borg: TRANSMISSION LINES?

Rastetter: TRANSMISSION LINES, IN A LOT OF PARTS OF THE STATE, THERE ISN'T ENOUGH CAPACITY TO CARRY THAT ON A LARGE-WIND TURBINE PROJECT.

Glover: SENATOR KIBBIE, WIND IS A BIG DEAL IN YOUR PART OF THE STATE UP IN NORTHWEST IOWA.

Kibbie: YES, IT IS.

Glover: WHAT'S THE NEXT LOGICAL STEP FOR THE STATE TO ENCOURAGE THAT INDUSTRY? YOU'VE DONE SOME TAX CREDITS, AS MR. RASTETTER MENTIONED. WHERE DO YOU GO?

Kibbie: AS AN EXAMPLE, WE GOT TWICE AS MANY APPLICATIONS FOR THE WIND ENERGY CREDITS AS WE HAVE MONEY, AND SO THERE'S A LOT OF THOSE -- A LOT OF FOLKS OUT THERE IN RURAL AREAS UNDER THE SMALL WIND FARM BILL WHERE TWO OR THREE OR MORE FARMERS CAN GO TOGETHER. WHAT THEY'VE GOT TO HAVE IS A MARKETING AGREEMENT WITH EITHER THEIR R.E.C. OR THEIR PRIVATE UTILITY TO BE ABLE TO RETAIL THAT WIND PRODUCT. AND WE NEED A LOT MORE COOPERATION IN THAT AREA. BUT THERE'S CERTAINLY A LOT MORE WE CAN DO IN THAT AREA, AND WE NEED TO EXAMINE THAT AND ADDRESS IT AGAIN IN THE LEGISLATURE AND PUT SOME MORE MONEY IN IT.

Glover: AND THERE'S BEEN A SUGGESTION THAT EVERY SCHOOL SHOULD HAVE A WIND TURBINE BOTH TO PRODUCE SOME ENERGY AND TO EDUCATE YOUNG PEOPLE ABOUT THE ROLE THAT WIND PLAYS IN OUR ENERGY PICTURE? DO YOU LIKE THAT IDEA?

Kibbie: I LIKE THAT IDEA. SPIRIT LAKE HAS TWO WINDMILLS. ROYAL HAS ONE. CENTRAL FENTON HAS ONE. THE COMMUNITY COLLEGE HAS ONE; AND THEY'VE GOT THE ONLY PROGRAM IN THE UNITED STATES TO TRAIN PEOPLE ON WIND ENERGY MAINTENANCE. AND THEY'VE GOT MAJOR COMPANIES CALLING THEM FROM ALL OVER THE UNITED STATES, INCLUDING GENERAL ELECTRIC, TO SEND PEOPLE THERE TO GET TRAINED TO DO MAINTENANCE ON WINDMILLS. AND SO IT'S A -- IT'S A HOT BUTTON ISSUE AND IT NEEDS TO BE ADDRESSED.

Yepsen: MR. RASTETTER, I WANT TO GO BACK TO THE ISSUE OF WIND ENERGY SALES. SENATOR KIBBIE MENTIONED THIS PROBLEM THAT YOU HAVE BETWEEN SMALL PRODUCERS GENERATING WIND ENERGY WHO THEN TRY TO SELL IT TO THE R.E.C. OR TO THE INVESTOR-OWNED UTILITY. IS THAT STILL A PROBLEM IN IOWA?

Rastetter: IT IS. PART OF THE CHALLENGE WITH WIND IS THAT IT'S INTERMITTENT. SO EUROPE, FOR INSTANCE, HAS ABOUT 17.5 PERCENT OF ITS ENERGY CREATED BY WIND. IOWA HAS ABOUT 4. BUT IN TIMES WHEN ENERGY USE IS HIGHEST, I.E., AUGUST, THE WIND DOESN'T BLOW AS MUCH IN IOWA. SO UTILITY COMPANIES HAVE TO HAVE EXCESS CAPACITY TO BE ABLE TO COVER THAT. SO THAT ISSUE NEEDS TO BE HANDLED, BUT EVERYONE HAS TO HAVE A PPA TODAY. SO YOU HAVE TO HAVE A POWER PURCHASE AGREEMENT WITH THE UTILITY COMPANY TO GET THEM TO ACCEPT THAT WIND. SO THE TRANSMISSION OF HAVING THE ABILITY TO SEND THAT IN DIFFERENT PLACES SO JUST ONE AREA OF THE STATE ISN'T DEPENDENT UPON HAVING TO USE THAT ENERGY IS PRETTY IMPORTANT.

Yepsen: SHOULD -- DOES THE LEGISLATURE NEED TO DO SOMETHING TO HELP BUILD MORE TRANSMISSION LINES FROM NORTHWEST IOWA TO GET THAT POWER INTO CENTRAL IOWA AND, SECONDLY, TO SOLVE THIS PROBLEM OF SMALL WIND PRODUCERS WHO CAN'T SEEM TO SELL IT BACK TO A POWER COMPANY? MR. RASTETTER, DOES THE LEGISLATURE NEED TO ACT?

Rastetter: I THINK IF WE REALLY WANT THAT TO BE A VIABLE PART OF OUR ENERGY RESOURCE, WE NEED TO.

Yepsen: SENATOR, WILL THE LEGISLATURE BACK THAT?

Kibbie: I HOPE SO, AND WE SHOULD.

Glover: MR. RASTETTER, WE'VE TALKED A LOT ABOUT A LOT OF DIFFERENT ENERGY SOURCES HERE TODAY, BUT I HAVEN'T HEARD ONE COME UP THAT WAS VERY POPULAR A FEW YEARS AGO. WHAT HAPPENED TO SOLAR?

Rastetter: YOU KNOW, YOU DON'T READ VERY MUCH ABOUT IT. I THINK THE TECHNOLOGY HASN'T BEEN DRIVEN AS MUCH THERE AS WHAT IT'S BEEN IN ETHANOL, BIODIESEL, AND WIND. ONE OF THE INTERESTING THINGS ABOUT WIND IS THAT WITH THE NEW TECHNOLOGY, TWO-THIRDS OF THIS STATE NOW HAS A WIND RESOURCE THAT IS EFFICIENT AND COMMERCIALLY AVAILABLE. A FEW YEARS AGO, IT WOULD HAVE BEEN THE NORTHERN THIRD OF IOWA THAT YOU EXPERIENCED NORTH OF AMES. SO THAT TECHNOLOGY IS CATCHING UP. AND I THINK REALLY, FOR A LOT OF THINGS IN RURAL IOWA, IT BECOMES A COMMITMENT OF WHAT VISION WE HAVE FOR THIS STATE AND HOW WE WANT TO SEE IT GO FORWARD AND HOW WE HAVE A MIX THAT TAKES ADVANTAGE OF OUR NATURAL RESOURCES. AND THAT WOULD BE ONE OF THEM.

Glover: SENATOR KIBBIE, DOES SOLAR ENERGY FIT ANYWHERE IN YOUR ALTERNATIVE ENERGY PLANS?

Kibbie: SOLAR HASN'T BEEN AS SUCCESSFUL. EVEN AT THE COMMUNITY COLLEGE IN EMMETSBURG AT A SOLAR PROGRAM, THEY BUILT SOME HOMES AND MADE THEM SOLAR EFFICIENT. IT'S NOT POPULAR. MAYBE IN OTHER PARTS OF THE UNITED STATES IT IS. I DON'T KNOW A LOT ABOUT THAT. ALL I KNOW IS I BOUGHT SOME SOLAR STOCK AND I KNOW WHAT HAPPENED TO IT. BUT WE NEED TO TAKE ANOTHER LOOK AT THAT AND MAYBE THERE'S NEW TECHNOLOGY THERE. BUT, YOU KNOW, YOU TALKED ABOUT THE STUDY THEY DONE ON ETHANOL, YOU KNOW. THE PEOPLE THAT DONE THAT STUDY, THEY EVEN CHARGED CREDITS AGAINST THE SUN ON RAISING CORN AND THE FERTILIZER AND THE CHEMICALS YOU USE IN RAISING CORN AND PLOWED THAT ALL INTO THE COST OF ETHANOL, WHICH IS PRETTY RIDICULOUS.

Yepsen: SENATOR, DOES THE STATE HAVE TO DO MORE TO FOSTER THE USE OF NUCLEAR POWER?

Kibbie: I DON'T KNOW WHETHER WE DO OR NOT. I THINK THAT NUCLEAR IS BEING TALKED ABOUT, ESPECIALLY MORE IN FOREIGN COUNTRIES. THERE'S STILL SOME TALK HERE IN THE UNITED STATES OF DOING MORE THAT WAY. I DOUBT IT. I THINK WE OUGHT TO -- WE OUGHT TO GO TO OUR HOMEGROWN RENEWABLES HERE. BIODIESEL AND ETHANOL, IT OUGHT TO BE REQUIRED ON EVERY GALLON USED ON THE ROADS IN IOWA. AND THOSE MOTORS THAT ARE NOT USED ON THE HIGHWAY, THAT FUEL IS EXEMPT. WE OUGHT TO HAVE THAT CLEAR UP FRONT.

Yepsen: SENATOR, I WANT TO GO BACK TO A QUESTION THAT MIKE RAISED A MINUTE AGO, AND THAT IS THE WHOLE QUESTION OF SUSPENDING THE GAS TAX. IF I HEAR THE INDUSTRY CORRECTLY, IOWA NEEDS TO BE THINKING ABOUT DOING THE OPPOSITE, AND THAT IS RAISING GAS TAXES. BECAUSE AS THE LEGISLATURE -- AS WE CREATE MORE FUEL EFFICIENT VEHICLES IN OUR STATE, OUR GAS TAX REVENUES ARE FLATTENING OUT OR DECLINING BECAUSE IT'S A PER-GALLON TAX, PLUS CONSTRUCTION COSTS ARE GOING UP. SO LET ME FLIP THE QUESTION --

Kibbie: WELL, THE GAS TAX HASN'T BEEN RAISED SINCE '84, AND THE ROADS ARE DETERIORATING. AND NO WORSE THAN -- THE WORST I'VE SEEN IS IN NORTHWEST IOWA. WE'VE BEEN TALKING ABOUT HIGHWAY 20 NOW FOR TWENTY YEARS.

Yepsen: SO SHOULD THE LEGISLATURE RAISE THE GAS TAX?

Kibbie: I DON'T KNOW. IF IT COMES TO A VOTE, I WOULD VOTE FOR IT.

Yepsen: HOW MUCH?

Kibbie: I DON'T KNOW THAT. IT WOULD HAVE TO BE A SIZABLE AMOUNT. IF WE WANT OUR ROADS AND HIGHWAYS FIXED IN THIS STATE LIKE THE PUBLIC IS DEMANDING, WHY, WE'RE GOING TO HAVE TO FIX THE ROADS.

Yepsen: IS THAT A POSSIBILITY FOR THE COMING SESSION?

Kibbie: NO, I DON'T THINK IT IS.

Glover: MR. RASTETTER, WHATEVER MIX WE HAVE IN THE ENERGY FIELD IN THIS STATE, IT'S FAIRLY CLEAR THAT WHAT WE HAVE ON THE GROUND IN TERMS OF EXISTING UTILITY COMPANIES IS GOING TO BE A PART OF THAT MIX, A SIGNIFICANT PART. GIVE THOSE UTILITY COMPANIES A GRADE. HOW ARE THEY DOING IN DEALING WITH THIS ENERGY PROBLEM THAT WE HAVE? ARE THEY BEING INNOVATIVE IN WORKING WITH PEOPLE? GRADE IT.

Rastetter: I THINK THEY'RE TRYING TO BE. I THINK WHAT'S CLEAR WITH ANY OF THIS IS IT HAS TO -- IT HAS TO BE DONE IN SUCH A WAY THAT YOU'RE NOT RAISING THE COST TO THE CONSUMER ON THE PRODUCT THAT YOU'RE SELLING. AND ETHANOL CLEARLY DOESN'T DO THAT. IT ACTUALLY LOWERS THE COST AT THE PUMP. WIND, ON DEALING WITH THE INTERMITTENCY, IS AN ISSUE. THEY BELIEVE THAT THEY CAN HAVE 10 TO 15 PERCENT ULTIMATELY, IF THE TRANSMISSION IS THERE, OF WIND. SO IT GETS BACK TO CREATING THAT INFRASTRUCTURE TO DO THAT. SO I THINK THEY'RE RECEPTIVE WITH IT. THE CHALLENGE IS IOWA DOESN'T HAVE A LARGE POPULATION BASE, SO WE NEED TO EXPORT A LOT OF THAT.

Borg: I'D LIKE TO KNOW WHAT YOUR LEGISLATIVE AGENDA IS FOR THIS SESSION. WE'VE ASKED SENATOR KIBBIE --

Rastetter: I THINK --

Borg: GO AHEAD.

Rastetter: NO, WE -- WE CLEARLY SUPPORT THE EFFORT TO MANDATE ETHANOL AND BELIEVE THAT IT WOULD BE IN THE BEST INTEREST OF THE STATE, CONSUMERS, AND AS WELL AS ECONOMIC DEVELOPMENT IN RURAL IOWA TO CONTINUE THAT PROCESS. AND WHAT I THINK IT DOES MORE THAN CREATE GALLONS USED, BECAUSE 80 PERCENT OF THE PUBLIC TODAY IS USING E10, WHAT IT CLEARLY DOES IS SEND THE MESSAGE TO THE REST OF THE COUNTRY THAT DOES HAVE ETHANOL MANDATED AND USED LIKE CALIFORNIA, THAT IOWA IS GOING TO DO THAT AS WELL.

Borg: AS THE STATE LOOKS FOR ECONOMIC DEVELOPMENT OPPORTUNITIES, IS THE ALTERNATIVE FUEL INDUSTRY GETTING ALL THAT IT SHOULD BE GETTING, IN YOUR OPINION?

Rastetter: YOU KNOW, SOMETIMES A NUMBER OF US IN RURAL IOWA ARE A LITTLE CHALLENGED BY THE VALUES FUND THAT GOES TO JOB CREATION, WHEN THE ETHANOL INDUSTRY REALLY HASN'T QUALIFIED MUCH FOR THAT. AN EXAMPLE OF THAT, WE'RE SPENDING $110 MILLION IN FAIRBANK, IOWA, TODAY, AND THERE'S 1,000 PEOPLE IN FAIRBANK. THAT'S ABOUT $100,000 PER PERSON IN CAPITAL INVESTMENT, AND WE HAVEN'T GOTTEN ANY VALUES FUND MONEY. AND REALLY IT'S NOT AVAILABLE BECAUSE IT'S NOT AVAILABLE ON A CAPITAL INVESTMENT BASIS. AND I THINK WHAT CLEARLY -- AND NOT THAT I'VE QUARRELED WITH THAT, BUT THE OPPORTUNITY IS FOR THE STATE TO EMBRACE AN INDUSTRY RATHER THAN PICK AND CHOOSE WINNERS IN BUSINESSES.

Glover: SENATOR KIBBIE, IS THE STATE GOING TO -- THAT'S A COMMON CRITICISM YOU HEAR OF THE IOWA VALUES FUND IS THAT IT'S AN URBAN DRIVEN PROGRAM. IS THE LEGISLATURE NEXT YEAR GOING TO DO ANYTHING TO MAKE THAT VALUES FUND MONEY MORE AVAILABLE IN RURAL PARTS OF THE STATE?

Kibbie: I THINK WE OUGHT TO TAKE A LOOK AT THAT, BUT I DON'T KNOW THAT IT IS ONLY URBAN IOWA. I KNOW A LOT OF COMPANIES AND START-UP COMPANIES THAT HAVE GOT VALUES FUND MONEY OVER THE PAST TWO OR THREE YEARS.

Glover: THEN WHY DO WE HEAR THAT CRITICISM SO OFTEN?

Kibbie: WELL, I THINK THEY HEAR OF WELLS FARGO AND OTHER BIG INSTITUTIONS THAT PROBABLY DON'T NEED THE MONEY, BUT IN ORDER TO ATTRACT THEM TO IOWA, IT GETS SPENT THAT WAY AND THAT'S WHAT MAKES THE HEADLINES. YOU KNOW, THERE'S AN ISSUE THAT I THINK IOWA OUGHT TO EXPLORE, AND THAT'S REFINING GASOLINE. WE HAVEN'T BUILT ANY NEW REFINERIES IN THIS STATE FOR THIRTY YEARS. YOU KNOW, THE STATE -- IF NOBODY ELSE IS GOING TO DO IT, THE STATE OUGHT TO LOOK INTO THAT. THAT WOULD BE A GOOD PLACE TO SPEND SOME VALUES FUND MONEY TO REFINE BIODIESEL AND ETHANOL. AND THERE'S A LOT OF REASONS THAT STATES CAN TAKE A BOLD STEP IN SOLVING OUR ENERGY PROBLEMS.

Borg: THANK YOU VERY MUCH FOR SPENDING TIME WITH US TODAY. I'M SORRY THAT WE'RE OUT OF TIME. AND WE'LL HAVE YOU BACK SOON AS WE -- WE AREN'T GOING TO SOLVE THESE PROBLEMS OVERNIGHT, AND WE KNOW THAT YOU'RE WORKING ON IT.

Kibbie: APPRECIATE BEING HERE.

Borg: ON OUR NEXT EDITION OF "IOWA PRESS," WE'LL AGAIN FOCUS ON THE CAMPAIGN TO REPLACE GOVERNOR TOM VILSACK WHEN WE LEAVES OFFICE. STATE REPRESENTATIVE ED FALLON OF DES MOINES IS IN THAT CROWDED FIELD OF SIX CONTENDERS SEEKING THE DEMOCRATIC PARTY NOMINATION. HE'LL JOIN US NEXT WEEK TO DISCUSS HIS CAMPAIGN AND THE ISSUES. THAT'S 7:30 FRIDAY, SUNDAY AT NOON. I HOPE YOU'LL WATCH. I'M DEAN BORG. THANKS FOR JOINING US TODAY. FUNDING FOR "IOWA PRESS" WAS PROVIDED BY "FRIENDS," THE IOWA PUBLIC TELEVISION FOUNDATION; AND BY THE IOWA BANKERS ASSOCIATION... FOR PERSONAL, BUSINESS, AND COMMERCIAL NEEDS, IOWA BANKS HELP IOWANS REACH THEIR FINANCIAL GOALS.

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