Kansas regulators reject most of utility’s energy efficiency proposal

In Kansas, which ranks 48th in the nation for its lack of energy efficiency incentives, regulators have rejected most parts of a utility proposal to establish a set of efficiency benefits for its customers.

Kansas City Power & Light (KCP&L) wanted to create a set of benefits in Kansas very similar to those it offers its customers on the Missouri side of the Kansas City metropolitan area. However, the Kansas Corporation Commission ruled on Thursday that most of the rebates and other benefits did not justify their cost.

A few components of the proposal did survive, including an energy-efficiency education program as well as efficiency benefits targeted toward low-income residents. Those initiatives aren’t required to meet the cost-benefit test that is applied to other parts of the utility’s proposal. The commission also determined that a lighting incentive would deliver benefits exceeding its cost, as well as two programs for business customers. Those are a demand-response incentive and a standard efficiency rebate.

However, those successes were small consolation to Dorothy Barnett, who advocated for the efficiency program on behalf of the Climate & Energy Project in Kansas.

KCP&L made clear that it was offering a web of interconnected programs, “kind of an all-or-nothing thing,” Barnett said. “I’d be surprised if they opt to go ahead with the low-income or education without the other programs included. We’d like to talk about what the next steps are. There were more than 1,000 comments supporting energy efficiency on the Kansas side, so we were very disappointed that the commission isn’t allowing that.”

A KCP&L spokesperson did not indicate how the utility will proceed, but said in an email: “We are currently reviewing the order issued by the Kansas Corporation Commission last week and are pleased to have been a part of furthering the policy discussion around energy efficiency in Kansas. We thank the KCC and other involved groups for participating in this important conversation over the last year.”

First attempt

This is the first utility attempt to create an energy efficiency program since the legislature passed the Kansas Energy Efficiency Investment Act in 2014. The law allows utilities to be reimbursed and to earn some profit on funds spent on customer efficiency programs.

KCP&L had offered some experimental efficiency benefits prior to the bill’s passage, but allowed them to lapse. The utility essentially was attempting to replace that program with benefits conceived under the 2014 law, Barnett said.

The proposal “was based on programs that have been running in Missouri for four years. It’s not pie-in-the-sky. They’ve been doing them quite well in Missouri. Customers are satisfied, the commission is satisfied, the consumer advocate seems to be satisfied. They invested even more money in energy efficiency on the second round.”

The commission’s rejection was based in part on its assessment of the proper way to calculate how much expense the utility could avoid through reduced electricity sales. Also, the commission and the Citizens Utility Ratepayer Board disagreed with the utility about what tool to use in approximating the useful life and savings for specific energy efficiency measures. KCP&L used a “technical resource manual,” while the commission and the ratepayer board maintained that the California Database for Energy Efficiency Resources is the more accurate source.

The ratepayer board advised the commission not to approve the efficiency plan.

Although KCP&L was asking to institute a program in Kansas that is very similar to its program in Missouri, the regulatory response in the two states was quite different — an outcome that surprised Barnett.

“KCP&L is very specific that it wants to do the same thing in Kansas that it’s doing in Missouri,” she said. “All the numbers for what the programs cost, what they’ll save, for how long the avoided generation will be — those were the same as in the Missouri filings.”

KCP&L has 15 days from June 22 to ask the commissioners to reconsider their decision. If last week’s decision stands, Barnett said she may try to address the language of the Energy Efficiency Investment Act in the legislature next year.

“I think there are several pieces that may need to be looked at,” she said. “Parts of the law are ambiguous. It could be interpreted however you wanted. If you’re inclined to approve energy-efficiency programs, you could use that law to justify it. If you’re inclined not to approve energy efficiency programs, you can point to the law that says we may do this.

“It’s something we’ll be be taking another look at to see if that’s where the issue was.”

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