Climate and energy

Surprise bonus! MH decided to attend the hearing on the KCPL bill (HB 2362) before the Senate Committee on Energy and Utilities, which begins at 9:30 a.m. Add this to the House Select Committee hearing at 1:30, and we are going to have a day full of fun.

We await the committee. Actually, every time I say that – imagine the scene. The conference room is slowly filling full of lobbyists, reporters, etc. People either laugh loudly or talk quietly. We wait… we wait… groups change and merge, like little social amoebas who feed off information… there is always the interesting exchange and retreat of impression, domination, submission, a constantly shifting hierarchy that’s always reinforced yet undermined, at the same time – I remain amazed at how political folks have an uncanny sense for reading reactions (and adjusting) on the turn of a dime. You kind of have to be born like that. It’s a fairly impossible skill to learn – at least on that high a level.

That’s just the audience. Somewhere, where I can’t see them, are the players upon the stage. The members of the committee itself are frantically talking among themselves – either in person, or on their phones – to members of their party, to members of the other party that they either consider (a) somewhat friendly, and/or (b) easy to squeeze for info. These hearings/ meetings are all scripted, to the extent possible – well, they are both scripted and haywire. I’m sure some folks think they have it down, and then someone they thought they had figured comes in and throws them for a loop.

Anyway! Just a bit of the atmosphere. We await the committee. Hit your refresh button around 9:30 to catch up on yet another episode of energy and climate drama, I mean policy! Kansas-legislature-style.

From two copies of written testimony that I have – KCPL is testifying pro. To summarize: they are raring to go on energy efficiency, so they need rate recovery. Like, yesterday. KCC is testifying con. To summarize – yes they love energy efficiency and they are working on it themselves quite hard, thanks, so, um, don’t rush them by doing this legislatively.

Hey. Just a summary. Homebuilders Assoc of KC is testifying pro. Westar is – testifying. Generally, yay energy efficiency, but I don’t see a statement of whether they are pro or con. AARP is pro. Sierra Club is pro. KC Chamber is pro. Mid-America Regional Council (MARC) is pro. Olathe School District is pro. CEP is pro.

Note to self: follow up for digital files. Note to other readers: If I spell your name wrong or otherwise type something that makes you cranky, leave a note in the comments and I will fix it! Or tell me. In person.

We are still awaiting members of the committee, BTW. Very soon. Note: there is a very high quotient of very, very dark suits in the room today. Normally there is more color variation. You may laugh – but I bet this is on some level significant.

Now we go. Members of the committee present (as of right now) are Senators Emler, Apple, Lee, Reitz, Petersen, Taddiken, Francisco, Pyle,. Not (yet) present: Pine.

First is a presentation by BPU, an electric and water utility. Mark Conklin, general counsel. They are here to address concerns raised during 2007 legislative session, among other topics. They are committed to communicating with policymakers and public (MH will not cover this presentation in detail). They are good corporate citizens who are concerned about their community and safety and reliability and keeping rates low. They are interested in energy efficiency and conservation. They participated in Extreme Home Makeover, the KC episode with the Iraq vet (which MH actually saw).

Now, rates. And perceptions of rates, especially as tied to the Kansas Speedway. There were some partnerships reached and expenditures approved that some didn’t like, and so BPU is taking that into account. Some spending has been questioned (meals, entertainment, KS speedway suites, t-bones ballpark), but it wasn’t out of bounds. Those were legitimate business expenses. Still, BPU backed it off completely anyway.

Also they implemented an energy rate component that reflects costs of producing electricity. Every six months it trues up costs of rate design. (MH missed a transition) They have lowered their base rates and implemented alternate rate design, encouraged customers to conserve energy in summer and spend more in winter, to buy electric heat. Their calculations are only based on true costs, not overhead.

More on operations and maintenance costs – transmission, open access, power station fires, explosions. Tension between costs of producing energy for a smaller utility, versus buying it on the open market at often high prices. These are the some of the things that their board struggles with. Rates are high because of purchase power problems, since at least 2002. Problem for a metropolitan area, and also differences between industrial/ commercial, and home uses.

Re growth of Wyandotte County, isn’t BPU making more money? Explains why not. Again addresses issues of meal expenses for BPU that legislature raised in 2007. In 2006, they changed mgmt. New general manager, who actually reduced this amount by $5,000. “Our world is a world that need to network and build relationships, and we often do that over meals. However, BPU does not do that any more” Amount in 2005 was $25K, now it is below $10K. Tremendous drop-off. All business meals. just volume of meals was at issue. Not any more.

Like rest of state, they need a whole lot of help with transmission. Lots.

He ends presentation. Lee asks questions about comparative costs between coal and gas. He quantifies those costs in terms of what they, a small utility, must spend to produce energy. Their natural gas costs are very high to produce themselves, but cheaper to buy off the grid. They use their natural gas when the cost is economical.

Emler. Sen. Steineger has passed out chart on BPU’s rates. Steineger says the BPU rates are still too high, and they need to consider their long-term future as energy producer. Also, rate base in Wyandotte county is not growing. They need to do some soul-searching.

TESTIMONY BEGINS ON HB 2632

Senators Francisco and Taddiken take a moment to introduce their pages. Some of their mothers are here as well. All wave.

Emler opens hearing on HB 2632. Won’t get thru all conferees this morning.

KCPL Mike Deggendorf

this bill is about energy efficiency, which is good for customers, environment, businesses, etc. KCPL needs supportive regulatory environment to make that happen. They work with environmentalists and others. When view energy efficiency as a supply source, it is cheaper and less risky than other supply options. Also allows investments in local communities, and gives customers more control over energy dollar.

today KCPL has 12 energy efficiency (EnEff) pilot programs approved already. They want to make these permanent. These programs are working. Ie, this summer, KCPL did not hit peak demand, because they worked with customers to reduce load.

They see a lot of potnetial to reduce carbon. EnEff plus renewables will help bridge the next ten years before low-carbon technologies are widely available. Teh challenge is getting regulatory framework to change, and grant certainty and recovery for utilities who invest in EnEff and to achieve CO2 reduction and get the environmental benefits.

Concept of bill is simple. A dollar invested in EnEff should be like dollar spent on traditional energy investments. The benefits and potential are real, and now is the time to act.

He concludes. Lee – question – “you have selective concern for regulatory certainty. You have it for KCC, but not KDHE.”

Deg. – we care about KCC yes.

Lee – you have decided not to be part of the other discussion (MH – this is presumably in reference to the Holcomb bill, where KCPL testified as a neutral) (that link takes you to the pdf in the CEP website’s library, where most of the Holcomb bill House testimony is now online)

Deg. – we are concerned with aggressive pursuit of energy efficiency

Lee – but you care only about programs KCC will allow you to capitalize costs for – will you explain -

Deg. – sure. he explains capitalization – costs for building new power sources, for example, are recoverable under rate of return, if approved by KCC if the costs are prudent.

Lee – is it normal – EnEff is much less risky than other capital at this time. Then why wouldn’t you only expect to receive normal reimbursement rather than capitalization

Deg – because EnEff is not risk-averse, either.

Lee – isn’t it true that thru EnEff you will have to build less new generation capacity, then you won’t get that higher rate of return?

Deg – the new demand that would normally be met by a new power plant would be met by EnEff instead

Lee – you want to charge the customer for this (she gets complicated)

Deg – we would like to return the same level of investment by investing in EnEff, that we would make in new generation.

Lee – I think the short answer to my question is yes

Paul Snider, KCPL

Because of short notice on Senate hearing, we have solicited some of our support from the House hearings. Westar, Sierra Club, CEP, MARC etc. We have a lot of support, from diverse supporters. I just wanted to illustrate that support.

Any questions? None.

No more proponents. Opponents? only four minutes left, though.

David Springge, CURB (Citizens Utility Ratepayers Board)

We all love energy conservation it makes us warm and fuzzy but this is not that, it is only an accounting bill. Paul Snider’s testimony, the people he mentioned – those people don’t really know what this bill is really about. Westar might. It’s an accounting bill. What I want to tell you – capitalization is not a good method of cost recovery because these costs are rising so rapidly. States who have done this have regretted it. It will only increase consumer rates. We have traditional accounting mechanisms that will do better.

Question from Sen. Taddiken – what are the alternatives, and how are they funded?

Springge – use a third party non -profit. Do a systems benefit charge, put it on the utility bill. I guess it will all be on the utility bill. But this is an expensive way of getting energy conservation

Lee – because as capitalized it is kept on the bill longer than it normally would be.

Tomorrow committee will meet again, to get another opponent testimony.

— Maril Hazlett, www.climateandenergy.org