Archive for Tuesday, September 21, 2010

Consumer advocates question Efficiency Kansas Loan Program

September 21, 2010, 10:19 a.m. Updated September 21, 2010, 7:15 p.m.


— Westar Energy wants to partner with a state program that would allow homeowners to tap into as much as $20,000 in loans to cover energy efficiency upgrades. Over the years, the loans would be repaid in the homeowner’s electric bill.

The program is part of the State Energy Office’s Efficiency Kansas loan program, which is being funded through federal stimulus dollars.

After completing an energy audit, homeowners can use the money from the loan to pay for such home improvement projects as sealing around windows and doors, insulation, heat pumps, new windows and more energy-efficient air conditioners.

So far, the state has partnered with banks and municipal utilities to dish out the funding to businesses and homeowners. Little interest has been shown in the program, with only about 50 loans made in the year that Efficiency Kansas has operated.

For a $240, one-time charge, consumers would be able to access a loan through Westar and repay it through their energy bill. The utility wouldn’t charge interest on the loan, which banks involved in the program do tack on.

“If our application is successful, we would be the first of the larger utilities in the state to offer the program,” said Gina Penzig, who is manager for consumer services at Westar.

As part of its application to the Kansas Corporation Commission, Westar is also asking to recover direct costs and lost revenue attached with the program. With consumers using less energy, Westar’s profit margins would suffer.

David Springe, consumer counsel for the Citizen’s Utility Ratepayer Board, thinks it is a good idea for Westar to partner with the state. But he doesn’t like the concept of Westar making all its customers cover the lost revenue from lower energy usage because of the home upgrades.

“It’s not going to cost Westar a whole lot of money. And it’s not going to cost the consumer much,” Springe said. “But this is the camel’s nose under the tent. When we start creating hold-harmless cost revenue mechanisms, where does it stop? This is just the beginning of energy-efficiency programs.”

Springe argued that when someone buys a new television or refrigerator that uses more energy, Westar doesn’t offer to give back money to customers. And consumers can decide to save energy on their own or use the Efficiency Kansas program but not go through Westar.

If the state is going to allow Westar to recover the cost of energy savings, then shareholders and investors should have lower rates of return on their money, Springe said.

But Westar thinks it has a right to recover those costs.

The U.S. Department of Energy indicated that in programs where there are measurable and quantifiable energy savings, utilities should have the opportunity to recover the costs associated with those programs, Penzig noted.

“Consumers, both those who are in the program and those who aren’t, are going to benefit,” Penzig said. “We won’t have to generate or purchase as much electricity. And in the long run a power plant doesn’t need to be built,” Penzig said.

Westar didn’t have an estimate on what the program would ultimately cost consumers.


SeaFox 7 years, 5 months ago

God, did you even read the article? These are LOANS, nobody is getting something for nothing. The problem is "the utility plans to recoup the revenue lost through energy improvements with rate increases to other customers." That's not how the market is supposed to work. If anything, utility rates for customers should go DOWN due to reduced utility demand from improved household efficiency. But in any case, there is something wrong with the utility raising rates just because they want to maintain a constant level of revenue regardless of how much consumers actually use their service. If they want to run their business that way, they need to change to a flat-rate pricing structure (like Internet providers did almost 20 years ago. Instead they are punishing people for improving their energy efficiency. How green is that?

Centerville 7 years, 5 months ago

Wait til January, when we'll get to see what's under the rock at the KCC. That's where the problems with this program originated and are maintained.

SeaFox 7 years, 5 months ago

@LJWorld Don't you guys think you headline is a little sensationalist and inaccurate?

"Consumer advocates question Efficiency Kansas Loan Program"

They aren't questioning the loan program itself, they are questioning the utility company's plans to raise rates to make up the lost revenue..

Here's a good question, why go into debt to make efficiency improvements to you home if the utility is just going to raise the rates so you're still paying the same for the lower amount of power you're using afterward?

Richard Heckler 7 years, 5 months ago

Reduce the pay to CEO's by 50%,dividends to shareholders by 50%,cut the golden parachutes and sell the corp jets.

Now we're on to sensible business.

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