Ratepayer advocates question cost of Kansas efficiency program

A Kansas City-based utility has proposed a new set of energy efficiency programs that could bring substantial energy-saving benefits to the majority of electric customers in Kansas.

However, consumer advocates say the program will not be worth the $30 million cost, while clean-energy supporters say the utility could go farther with its plan.

Kansas City Power & Light, which began offering modest efficiency incentives to its Kansas customers about a decade ago, now wishes to provide a broader set of incentives similar to those available to its Missouri customers.

The new benefits for homeowners include subsidies for LED bulbs and for various whole-house efficiency improvements such as insulation, windows and air sealing, and early replacement of air conditioners with a more efficient model.

The other new opportunity for the typical homeowner is a “home energy report,” in which customers may opt to receive a periodic report on the amount of energy used by neighboring households.

In the document it filed with the Kansas Corporation Commission, KCP&L wrote, “As customers access and use the program, they will receive information that puts their energy usage in context as well as salient, personalized advice highlighting opportunities to use less energy and save money.”

For multi-family living units, the proposed package includes a new “one-stop shop” approach to efficiency improvements, which is geared toward addressing conflicting financial interests between owners and occupants.

KCP&L also proposes to offer commercial and industrial customers standard rebates for lighting, climate control and motors, and more-tailored incentives for equipment outside the usual realm of energy-consuming machines. The utility also will provide “energy education, technical assistance, and coaching for large C&I customers in order to drive behavioral change and transformation of the company culture.”

KCP&L’s proposal, which would take effect on Jan. 1, 2017, would cost $29.7 million over a 36-month period. The company aims to save 91,700 megawatt-hours over the course of three years and to reduce demand by 52 megawatts. To get there, KCP&L is seeking approval for seven residential and seven business efficiency programs. Two of them would be aimed at low-income customers.

Benefits ‘do not outweigh the cost’

In an analysis filed with state regulators, the Citizens’ Utility Ratepayer Board — a Kansas state agency charged with protecting the interests of residential and small-business electricity customers — advised the commission to reject KCP&L’s efficiency proposal.

David Nickel, consumer counsel for the board, said he believes that “the benefits overall to this program do not outweigh the costs.”

Nickel says that KCP&L’s analysis of the program’s costs and benefits did not use the Database for Energy Efficient Resources (DEER), a collection of well-documented estimates of energy and peak-demand savings, measured costs and effective useful life.

DEER was developed by a pair of government entities in California that deal with energy matters, and the Kansas Corporation Commission has explicitly directed utilities to use it in developing financial analyses of proposed projects.

The Citizens’ Utility Ratepayer Board suggested that KCP&L chose to use a different set of estimates because it put a significantly sunnier spin on the project’s financial numbers.

Although the Citizens’ Utility Ratepayer Board (CURB) generally favors energy efficiency, Nickel said, “It’s CURB’s position that KCP&L should have used DEER values, and in failing to do so, we have trouble believing the benefits outweigh the costs. Consequently, we believe they should be rejected outright.”

Brian File, a senior manager in KCP&L’s efficiency program, said the intent was to use a set of values “more pertinent to the KCP&L service territory based on geographic factors (weather, etc.) and technology factors in terms of what types of equipment are currently offered and what customers currently have installed in their homes and businesses.”

The efficiency incentives that KCP&L has proposed for Kansas are very similar to the efficiency program that the company operates across the state line in Missouri.

As KCP&L explained in its proposal, the utility is seeking uniformity among all of its customers “to minimize customer confusion, maximize marketing opportunities, and utilize existing implementers across a broader customer base. Such consistency across all KCP&L jurisdictions reduces overall costs to deploy these programs.”

Energy efficiency – and the subsequent reduction in power sales — became more attractive to Kansas utilities in 2014 when the Kansas Energy Efficiency Investment Act took effect. Although the Act does not require utilities to provide efficiency incentives, it makes those investments more attractive to utilities. The law requires that, for ratemaking purposes, those investments be treated on par with spending on generation, transmission and distribution infrastructure.

The new law provides a couple of bonuses to utilities as well. They may receive some compensation for reduced power sales resulting from their customers’ greater efficiencies. Furthermore, utilities that meet their energy-saving goals qualify for extra earnings.

Not doing enough?

Although she expressed some concern that KCP&L might not be setting its sights high enough, Dorothy Barnett, executive director of the Climate + Energy Project in Kansas, said, “We’re excited that KCP&L’s Kansas customers are finally going to have access to the kinds of programs Missouri has. We think that providing opportunities for customers to save money and energy is hugely valuable for the environment, and has huge economic benefits.”

Those impacts would be greatly expanded if the Kansas Corporation Commission approves a proposed utility acquisition in Kansas. Great Plains Energy, the parent company of KCP&L, is seeking the state’s approval to purchase Westar Energy, which serves most of the eastern half of the state, excluding most of the Kansas portion of the Kansas City metropolitan area.

If the acquisition goes ahead, KCP&L will add about 700,000 Westar customers to the 247,000 customers it currently serves in Kansas.

“If these two companies merge, two-thirds of Kansas customers will be represented by one utility,” Barnett said. “If KCP&L is able to offer these kinds of energy-efficiency programs, then Westar customers will have access to those as well, and we are really excited about that.”

Broadly speaking, Barnett said, she likes what KCP&L has offered.

“But it’s still a pretty small percentage of their revenues,” she pointed out. “If there’s any concern, it would be that they are not spending enough to make a real difference.”

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