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ANALYSIS: Energy savings fee could cost on Missouri bills

Sunday, July 5, 2009 | 4:19 p.m. CDT

JEFFERSON CITY — Some Missouri residents and businesses could soon see a new charge on their electric bills — a fee for using less energy.

Although it might seem illogical, the new energy-efficiency charge has support from utilities, most lawmakers, the governor, environmentalists and even the state's official utility consumer advocate. The charge covers the cost of utilities' efforts to promote energy efficiency and cut power use.

The assumption is that charging consumers for those initiatives ultimately will cost less than charging them to build the new power plants that will be needed if electricity use isn't curtailed.

Legislation pending before Gov. Jay Nixon would set the criteria for state utility regulators to approve the energy-savings charges. If he signs the bill, the new law would take effect Aug. 28.

When lawmakers adjourned in mid-May, Nixon listed the little-publicized energy legislation as among his proudest accomplishments, describing it as a "good, good start on an energy policy" to be developed by his Department of Natural Resources.

"To save power is the equivalent of making power, and it's a pretty seismic shift" in Missouri's energy strategy, Nixon said.

Usually, regulators allow utilities to recoup the cost of building power plants or buying more power to meet customer demand. Recently, the Missouri Public Service Commission began allowing some utilities to pass along to customers the cost of programs that reduce demand for electricity.

For example, the PSC last week approved a program in which St. Louis-based AmerenUE can offer credits to businesses that voluntarily shut down or scale back their electricity use during peak demand. AmerenUE will be able to recoup the cost for the program that starts Thursday by increasing the rates it charges business customers.

Kansas City Power & Light Co. already has 19 energy efficiency and demand-reduction programs, said Chuck Caisley, the company's senior director of public affairs. He said the PSC is allowing the company to recoup up to $50 million of the programs' costs under a rate plan in effect through 2010.

One of the company's more popular energy-saving initiatives has provided free programmable thermostats to about 34,000 residential customers in Missouri and Kansas. KCP&L can remotely control the devices to reduce the frequency at which air conditioners run during peak demand times. The power company overrode customers' air conditioners four times last year and twice so far this summer, Caisley said.

KCP&L was among the leading advocates for the Missouri legislation.

"It will allow us to spend a great deal more on energy efficiency, because it holds us harmless" for the cost, Caisley said.

The legislation applies to KCP&L, AmerenUE and The Empire District Electric Co., the publicly traded utilities that serve nearly three-fourths of the state's population.

The utilities would have to get approval from the five-member PSC to pass on the cost of their energy-saving programs. To do that, the programs must result in an overall reduction in energy use. The legislation also requires the charges for the energy-saving programs to be listed as a separate line item on customer bills.

The U.S. Environmental Protection Agency estimates that energy-saving programs offered by utilities will add about 3 percent to the average electricity rates. But it says customers who participate in the programs could save 10 percent to 20 percent on their energy bills, and even those who don't participate might save if utilities don't have to buy more energy or build new power plants.

"It's one of those rare utility bills that actually works out to everyone's benefit," Missouri Public Counsel Lewis Mills, the state's official consumer advocate said.

PSC Chairman Robert Clayton fears Missouri's heavily coal-dependent electric customers will see a sharp spike in rates if federal climate legislation limiting carbon emissions becomes law. That makes it even more important for Missourians to reduce their collective energy use, he said.

Although the PSC took no position on the Missouri legislation, Clayton said he's fine with the idea of allowing utilities to recoup costs for energy-savings initiatives.

"Any tool we can give a consumer to reduce their usage is a good thing," Clayton said. "The trick is making sure the expenditure (by the utility) is a prudent expenditure and it's going to achieve results."


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Comments

Greg Collins July 6, 2009 | 11:43 a.m.

Being charged more for using less? Naturally .... it's the kind of pretzel logic I've come to expect - punish those conserving for their efforts by charging more and leave those using more untouched. I guess I'm old fashioned believing those who use more should pay more ... silly me.

(Report Comment)
Joe Blow July 6, 2009 | 7:01 p.m.

Dumb.

Raise the price of electricity so those who consume more pay more. Their high energy bills are their incentive to conserve energy. Painfully obvious, right?

Apparently not. Instead, the energy industry & gov't want to apply a flat fee to all customers.

From a consumer's standpoint this program is obviously questionable: We pay the fee regardless of what happens. If consumption falls, we pay the fee. If it increases, we pay the fee. If nothing happens, we still pay the fee...forever.

But this makes even less sense.

According to the Missouri Dept. of Natural Resources, residential consumption accounts for 48% of all electrical usage. The remaining 52% is commercial & industrial consumption. Since peak electricity consumption is during the work day, the obvious target of their efforts should be those who consume the most during peak hours which, of course, is commercial & industrial customers, not residential.

It's also much easier to target, promote, educate, etc. the 439,485 Missouri organizations as opposed to Missouri's nearly 6 million residents.

And, of course, there's typically far more wasted energy in commercial & industrial settings than in residential ones.

So the conclusion & course of action should be plainly obvious. But instead, our gov't simply wants to give $62.5 million more of our money to the electrical monopolies under guise of energy conservation. Pathetic.

Sources:
http://www.dnr.mo.gov/energy/eia-electri...
http://quickfacts.census.gov/qfd/states/...

(Report Comment)

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