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Utilities offer stances on clean-energy initiative

Sunday, October 26, 2008 | 8:30 p.m. CDT; updated 2:15 p.m. CST, Thursday, January 22, 2009
Proposition C would require investor-owned utilities to generate or purchase 15 percent of their electricity from renewable energy sources by 2021.

JEFFERSON CITY — Utility companies, advocacy groups and other officials agree: Renewable energy is a good thing for Missouri.

Exactly how to boost renewable energy's statewide presence is the divisive question.

Official Ballot Title

Shall Missouri law be amended to require investor-owned electric utilities to generate or purchase electricity from renewable energy sources such as solar, wind, biomass and hydropower with the renewable energy sources equaling at least 2% of retail sales by 2011 increasing incrementally to at least 15% by 2021, including at least 2% from solar energy; and restricting to no more than 1% any rate increase to consumers for this renewable energy?

The estimated direct cost to state governmental entities is $395,183. It is estimated there are no direct costs or savings to local governmental entities. However, indirect costs may be incurred by state and local governmental entities if the proposal results in increased electricity retail rates.

Fair ballot language for Proposition C:

A "yes" vote will amend Missouri law to require investor-owned electric utilities to generate or purchase electricity from renewable energy sources such as solar, wind, biomass (including ethanol) and hydropower. The required renewable energy sources must equal the following percentages of retail sales:

• 2% by 2011

• 5% by 2014

• 10% by 2018

• 15% by 2021.

Of the total renewable energy sources required to be sold, at least 2% shall be solar sources. Also, any rate increase to consumers resulting from this measure must be no more than 1%.

A "no" vote will not require Missouri's investor-owned electric utilities to generate or purchase electricity from renewable energy sources.

This measure will not have an impact on taxes.

For the full text of Proposition C, click here.

Source: Missouri Secretary of State's Office



One proposed answer is the Missouri Clean Energy Initiative, which will appear on the statewide November ballot as Proposition C. The initiative would require investor-owned utilities to generate or purchase 15 percent of their electricity from renewable energy sources by 2021.

Annual rate increases to pay for these alternative energy costs would be limited to 1 percent under the measure. Approved energy sources include landfill gas, wind and solar power, biomass and hydroelectricity.

The Missouri Coalition for the Environment commissioned studies that showed the initiative would create thousands of jobs and save Missourians $1.65 per month by 2030.

"The initiative really gives Missouri an opportunity to become a national leader in cleaner energy," Jim Kottmeyer, a consultant with Missourians for Cleaner Cheaper Energy, said in a previous interview. "And it's going to mean tens of thousands of jobs for the state and billions of dollars of economic development."

Because the ballot initiative addresses specifically investor-owned companies, only three of Missouri's utility companies would be affected.

Officials from AmerenUE, Kansas City Power & Light and Empire District Electric each said their company has programs or projects under way to integrate more renewable energy. This summer, KCP&L acquired Aquila, Missouri's fourth investor-owned utility.

Each company, however, has a different take on Proposition C.

AmerenUE

In an earlier interview, AmerenUE spokesman Tim Fox said the company is neutral toward the ballot initiative, and cited concerns about the possibility of rising energy rates that would have to come out of consumers' pockets.

Another AmerenUE official recently put forward a somewhat different stance on the initiative.

"Our position is that we are supportive of renewable energy efforts. We are not supportive of this ballot initiative," said Richard Mark, the senior vice president of AmerenUE's Missouri Energy Delivery department. "We feel that some of the plans already in place under Senate Bill 54 — the voluntary bill — do more to actually bring and develop sources of renewable energy to Missouri than this ballot initiative does."

Senate Bill 54, which was signed by Gov. Matt Blunt in June 2007, is one of two recent state Senate bills to impose voluntary standards on increased renewable energy usage.

Mark said AmerenUE has been exploring possible renewable energy sources since 2005, and has investigated specifically the potential of wind power sources in Missouri and Illinois.

Energy efficiency is another point of contention for AmerenUE. Proposition C does not mention energy efficiency as a goal nor as a means to fulfill the initiative's ultimate objective of promoting clean energy.

"We feel that the first place to start when talking about a comprehensive renewable energy plan has to start with conservation," Mark said. "Our studies show that between now and 2020, the Missouri customers are going to — at the rate it's going — require approximately 30 percent more energy needs than they do today. Our goal is to try to reduce that."

Mark also criticized the ballot initiative for its clause regarding renewable energy credits and solar energy. A renewable energy credit is, in the ballot initiative's language, "a tradable certificate of proof that 1 megawatt-hour of electricity has been generated from renewable energy sources." Proposition C would require solar energy to make up 2 percent of utility companies' energy portfolios.

Because the initiative would allow utility companies to purchase renewable energy credits to fulfill this requirement, Mark is concerned that Missouri utility companies will turn to this option instead of further developing in-state solar energy production.

"If companies can't achieve or feel that it's not possible to achieve the requirements for solar, they're just going to buy those" energy credits "in Texas or Arizona," Mark said. "Every customer in Missouri will pay for those" credits, he said, adding that the development and research for that energy will benefit the states in which those credits were purchased. "That will not promote development and growth in Missouri," Mark said.

Another AmerenUE representative said there's uncertainty about Proposition C's language related to the 1 percent cap on rate increases.

"There are different interpretations of what our legal obligation would be," AmerenUE spokesman Mike Cleary said. "We don't know exactly how that would work. Even if it stuck to a 1 percent cap per year, would it be 1 percent one year or 1 percent the next year? Over a period of several years, you could have a fairly significant rate increase, and that's in addition to the other things that are causing electric rates to go up."

Empire District Electric

Empire District, based in Joplin, receives energy through recently established 20-year contracts with Elk River Windfarm and Horizon Wind Energy's Meridian Way Wind Farm. The company, however, can't contractually claim to provide electricity produced by renewable sources, a company spokesperson said.

"We receive renewable energy credits for our investments in wind projects," said Emily Stanley, communications coordinator for Empire District. "Through the Green-E company, the renewable energy credits are sold on the retail market. So technically, we don't claim any of the environmental attributes at this time."

Should Proposition C be approved, Empire District can retain those renewable energy credits and claim them to receive legal recognition as a renewable energy consumer.

In the meantime, Empire District declares neutrality on the ballot initiative.

"We will look to see what we need to do to be compliant," Stanley said. "The passage of Proposition C doesn't change where we are with our business at this time. It does mean that we would be retaining" the energy credits "necessary to meet guidelines and requirements."

Kansas City Power & Light

Like AmerenUE and Empire District, Kansas City Power & Light has also launched renewable energy projects. Unlike the two other companies, however, KCP&L supports Proposition C.

"All the way around, we think this is a good opportunity to collaborate with our customers for a cleaner energy future," said Chuck Caisley, senior director of public relations at KCP&L.

KCP&L plans to triple the renewable energy output at one of its facilities by 2021 and is working on demonstration projects in solar energy. While these demonstration projects are not designed to add power to the company's grids, their value lies in their role as an educational tool.

"The whole point of a demonstration project is to better understand the technology, to show people how it works, to learn more about it yourself so you can ultimately build solar in a way that is commercially viable," Caisley said.

Another project focuses on offsetting carbon emissions at a proposed generation plant near Weston. In an agreement with the Sierra Club and Concerned Citizens of Platte County, KCP&L will use wind energy and energy efficiency to reduce carbon emissions.

KCP&L has pursued renewable energy and energy efficiency projects since 2005, when the company began soliciting feedback from customers about what they wanted to see from the company. In response, the community asked for more renewable energy output.

As a result, KCP&L has worked for a more diversified energy portfolio.

"We are pursuing wind," Caisley said. "We are looking at different solar applications. In addition, we are looking to co-fire one of our generation stations with biofuels. And we're also significantly advanced in energy efficiency, which we consider a green and renewable source."

AmerenUE is not the only vocal opponent of Proposition C. An official with the Missouri Public Service Commission, a state government agency that regulates investor-owned utility and service companies, also criticized the ballot initiative, especially regarding costs.

"I'm deeply concerned that the supporters of Prop C are not being honest with the voters of Missouri," said Jeff Davis, chairman of the Missouri Public Service Commission. "Based on all the information that I have so far, we'd have to build something like 3,000 megawatts of wind and solar generation in this state, while at a cost of $2,000 a kilowatt. They would have us spending $6 billion on renewable generation in the next 12 or 13 years. And quite frankly, that 1 percent is not even going to come close to covering it.

"It's not a question of 'Do they need the money?'" Davis said. "It's a question of if it's lawful. Do we have the authority to require" the utilities "to spend money, and then not be able to recover it in rates?"

Two separate studies commissioned by the Missouri Coalition for the Environment show considerable benefits Proposition C could produce for Missourians. One study on the ballot initiative's economic impact findsthe initiative would create nearly 20,000 jobs in various sectors and produce "an additional $856.6 million in income for Missouri workers."

The other study, conducted by Martin Cohen, is a more in-depth look at how Proposition C would affect Missouri consumers, utilities and environment. According to Cohen's Consumer Cost Savings Analysis, total renewable energy costs will be less than the gross costs of operation, maintenance and other expenses incurred by fossil fuel power by 2021. The typical residential customer would save $1.65 per month by 2031, and the 1-percent cap on annual consumer rate increases is doable.

Regarding carbon emission reduction, the report also concludes that by 2022, the initiative's requirements would have the same effect as removing nearly 2 million cars from Missouri roads.

However, Mark points out the Consumer Cost Saving Analysis' use of the phrase "Missouri heartland region" — which, in a footnote, Cohen says is a geographical region made up of Missouri and eight other Midwestern states.

"Some of those areas are better suited for some sources of renewable energy than maybe Missouri is," Mark said. "I think when you expand studies outside the borders of Missouri, it really distorts the analysis considerably."

Use of data from the "Missouri heartland region" is not widespread throughout the study and is attributed to a 2007 report by the Lawrence Berkeley National Laboratory.

Despite the questions and concerns raised by AmerenUE and the Public Service Commission, a representative with the campaign committee supporting the initiative said the response has been very positive.

"We've not seen any organized opposition," said Tony Wyche of Missourians for Cleaner Cheaper Energy. "We're very pleased with the broad and deep level of support that's been shown for the initiative."

Wyche emphasized Proposition C's economic, environmental and civic implications.

"Twenty-six states already do this," Wyche said. "We think it's time that Missouri step in, because it's good for our environment, our economy. But it's also something that will help us to break our dependence on foreign oil and allow Missourians to have their say on where they get their electricity."

 

BALLOT LANGUAGE

 


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