Missouri has been lagging behind other Midwest states in terms of using low-cost, zero-pollution energy efficiency to offset the need for dirty, expensive power plants. This is changing for the better, and while this change has been a long time coming, it’s worth taking a moment to acknowledge and celebrate.
To build a power plant, generate electricity, transmit it along transmission lines and distribute it to households and businesses costs between $65 and $150 per megawatt-hour. To save that same amount of electricity through energy efficiency programs costs about $30. Common sense would dictate that our electric utilities — which largely decide what resources to invest in for providing electricity services — should make energy efficiency a top priority, invest in all of the cost-effective energy efficiency it can possibly capture, and only then invest in more costly power plants. Our bills would be lower, and our air and water would be cleaner.
Missouri is taking steps to make this common sense proposition the guiding principle behind resource planning, and we are happy to report that customers will start to see those benefits this year.
More than three years ago, Governor Nixon signed into law the Missouri Energy Efficiency Investment Act with a goal of eliminating regulatory barriers that discourage utilities from investing in cheap, clean and abundant energy efficiency resources. The problem is that under traditional utility regulation developed in the early 20th century, the utility is rewarded for building more power plants and selling more power, while it is financially penalized for selling less. To meet the needs of today’s electric customers, we must reverse these regulatory signals to the industry.
When it enacted the Missouri Energy Efficiency Investment Act, the Missouri legislature directed the state’s Public Service Commission to draft rules aligning utility ratemaking policy with the goal of capturing all of the potential for energy efficiency. Those rules were finalized in 2011, and several of the state’s utilities have filed and gained approval for energy efficiency investment plans accordingly.
This month two major milestones toward this goal took place. First, Ameren Missouri launched the first authorized energy efficiency programs, offering customers of every size rebates, incentives and other assistance to take steps to save energy. Over the next three years the utility’s programs will produce energy savings with a present value of $360 million net of the costs of the programs and efficiency measures. This savings will be shared between the utility shareholders and its customers according to a formula negotiated by a number of state business and public interest advocates and approved by the Commission last July. If you participate in the programs, you are sure to save on your own bills, while lowering electricity system costs for everyone. A similar set of programs have been approved for another Missouri utility, KCPL-GMO, which will be launched later this spring.
The second milestone realized this month was the resolution of legal challenges to the new rules. On Jan. 15, Missouri Court of appeals upheld the Missouri Energy Efficiency Investment Act rules, clearing away clouds of doubt about the future of this endeavor.
Missouri is still playing catch- up to neighboring states such as Illinois and Iowa, which have been taking energy efficiency seriously for a much longer time. However, these recent steps represent a significant leap forward and one that will benefit Missouri’s economy while creating a more sustainable energy future.
Rebecca Stanfield is a member of the Natural Resources Defense Council.