Along with the price of using energy, utility bills across the state could soon include the cost of conserving it.
In the past few months, public utilities have come before the Kansas Corporation Commission with energy efficiency plans. These plans will ultimately be paid for by an increase in the rates charged to customers.
“Consumers need to be aware that this is happening, that there are costs and there are regulatory questions,” said Dave Springe, the consumer counsel for the Citizens’ Utility Ratepayer Board.
Traditionally, Kansas has ranked among the bottom tier of states in its efforts for conserving energy, according to a scorecard published by the American Council for Energy-Efficient Economy.
Dorothy Barnett, director of energy and transmission for the nonprofit the Climate and Energy Project, views the utilities’ proposals as a promising sign.
“We know energy efficiency costs at least half as much as any new generation,” she said. “Energy efficiency is really our first fuel.”
In her 2007 State of the State Address, then-Kansas Gov. Kathleen Sebelius asked energy producers to take on efforts to reduce energy consumption. In response, the KCC requested that investor-owned utilities come forward with energy efficiency plans.
KCC sees energy efficiency as an energy resource, similar to coal or wind, that is needed to meet existing and future energy demands, KCC communications director Cara Sloan-Ramos said.
“They have determined that reducing or postponing the need for construction of big generation plants or reserving the capacity of natural gas are goals that will benefit all utility customers,” Sloan-Ramos said.
Springe agrees that energy efficiency programs make sense for electric companies, where reduction in energy use allows utilities to avoid having to build expensive power plants to meet the peak demand that occurs during hot summer days. In those cases, even those who don’t participate directly in energy-saving programs would pay less by not having to contribute to the cost of a new power plant.
However, he doesn’t see an equal benefit for natural gas utilities, where only those who access the programs benefit, he said.
Last week, the KCC had a public meeting in Lawrence to gather input on Black Hills Energy’s energy efficiency plan.
It’s the first comprehensive plan to come before the commission. As Black Hills seeks approval from the KCC, Sloan-Ramos speculates that other utilities are waiting to see what gets passed before submitting their own plans.
Springe, who spoke out against the Black Hills plan, saying it was far too expensive and offered unwarranted incentives for the utility, worried that the KCC’s request for individual plans will produce a piecemeal approach to energy efficiency throughout the state.
“If you are going to make energy efficiency a priority, you need to offer it to everyone and it should not be based on where you happen to live,” he said.
He would prefer to see an independent state agency that oversees all energy efficiency programs.
‘Tailor the program’
While different models of energy efficiency programs are popping up throughout the country, Gina Penzig, manager of consumer services for Westar Energy, said it makes a lot of sense for the utility companies to be the ones offering the programs.
“We already have a relationship with our customer and we are in a good position to know what they are looking for because of those relationships. So we can pretty easily tailor the program to reach those needs,” Penzig said.
Third party providers of energy efficiency programs have been successful, such as a statewide agency established in Vermont, Barnett said. But those programs also come with a substantial bump in the cost of energy.
While Barnett said that it would be nice for everyone in the state to have access to the same program, the majority of Kansas customers are served by either KCP&L or Westar. Both of the electric companies has energy efficiency programs in the works.
The trick is providing an incentive for utilities and their investors to offer energy efficiency programs, which cut into how much of their product is consumed. And, finding out what incentives utility companies will get is exactly why the Black Hills case in front of the KCC holds so much interest.
“If a utility can show it has delayed the need for building expensive new generation at a cost lower than the new generation, we all win. The rates stay lower, pollution is reduced and consumers save money for today and tomorrow,” Barnett said. “We think it is important that shareholders are rewarded for their prudence. And we hope that is the direction they will head.”