Archive for Friday, February 17, 2006

House rejects bill aimed at promoting energy efficiency programs

February 17, 2006

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A bill promoted as an incentive for utilities to start energy conservation programs failed Thursday in the House because some members feared it would lead to higher rates for some consumers.

The measure directs the Kansas Corporation Commission to let utilities recover what they spend on energy conservation programs - and collect a profit besides. The KCC regulates utilities, setting their rates and determining what profits they can earn as monopolies.

But the House voted 65-42 against advancing the bill to final action, leaving the measure stranded on the debate calendar and far less likely to move further this year.

Rep. Peggy Mast, R-Emporia, said the state should let the market guide utilities' creation of programs to help consumers, not establish policy that could hurt those who've already made their homes and businesses energy efficient.

"The utilities are already moving in this direction voluntarily," Mast said.

But Rep. Forrest Knox, R-Fredonia, said the state needs to encourage programs that help Kansans weatherize their homes or purchase more efficient furnaces because energy prices are likely to rise in the future. Utilities will embark on such programs if they know they are going to recover their costs, he said.

"When we begin to speak about utilities, we're not talking about free markets," Knox noted. "We're talking about a regulated industry."

The three-member KCC typically sets rates by determining what expenses should be borne by consumers through rates, then allowing a percentage profit on that figure. However, state law requires the KCC to allow the utilities to pass along electric transmission costs directly to consumers.

Knox said even if rates go up to cover the cost of energy efficiency programs, consumers who take advantage of those programs are likely to save money because they're using less electricity or natural gas.

Still, he acknowledged that some consumers who don't participate in efficiency programs could see their costs rise, such as those who already have efficient homes and businesses.

And Rep. Nile Dillmore, D-Wichita, said he's concerned about attempts to get around the commission's rate-setting authority. While the KCC might want to reward a company for starting a program, it also might see savings in other areas that warrant keeping rates in check, he said.

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