While the KS legislature is no longer in session – and in fact the legislators are now swept up in the first throes of the election season (all 165 seats are up this November) – Kansas climate and energy policymaking still marches on.
Several groups are meeting over the summer – Kansas Energy and Environmental Policy KEEP advisory group and Kansas Energy Council (KEC) among them. In particular, though, the Kansas Corporation Commission (KCC) is working on two dockets of interest regarding energy efficiency.
The Commissioners released the first of those orders last week. Docket No. 08-GIMX-442-GIV sought to determine the proper benefit-cost tests and evaluation processes for regulated utilities who want to recover their costs for offering customers energy efficiency programs.
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Why is energy efficiency so important? For background on the issue, please check here - but essentially, right now utilities make money by selling more and more power to their customers. This often means that they burn more and more fossil fuels and release more and more carbon dioxide. There is currently little financial incentive for utilities to help their customers save power.
That is what these dockets could do – they could make it possible for utilities to make profits by helping customers save rather than spend their energy dollar. This process is known as decoupling.
The second docket before the KCC will focus specifically on the decoupling process. However, before they got to that one, the Commission needed the first docket to figure out some financial details of this possible regulatory transition.
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If you’d like to read the official order yourself, please click here (.pdf). For links to all of the testimony from all of interested parties who intervened, please click here and then search by the docket number, 08-GIMX-442-GIV. Some of the high points of the order are summarized below.
Kansas already has many energy efficiency related programs (such as interruptible service during peak hours) but right now those are mostly restricted to larger commercial and industrial customers. Energy efficiency programs also allow residential customers the ability to save energy dollars. KCPL in particular has introduced many of these programs.
The KCC staff suggested that since Kansans already pay so little for energy compared to the rest of the country, they wouldn’t see energy efficiency as a high priority. The Commissioners found that Kansas utilities are caught between a rock and a hard place – their loads are growing, but building new generation is incredibly expensive (in part due to the upcoming national price on carbon).
Thus, saving energy makes sense. Since carbon regulation will also result in increased costs to consumers, the KCC found it had a duty to be proactive and “adopt policies that encourage utilities to be responsive to environmental concerns and costs,” in order to minimize the eventual impact on ratepayers.
However, energy efficiency programs must meet certain standards – they have to provide “immediate and dependable energy savings” and prove it through an evaluation process. In addition, all proposed programs have to consider their impact on low-income consumers. Programs also need a strong education component, explaining why energy efficiency is important. Commissioners also required utility bills be revised to better help customers track their energy use and compare it to other similar homes.
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All good things to do. Now, how to analyze the costs? Before the KCC will allow a utility to recover for any approved cost, the utility must meet the burden of showing that that cost was reasonable and prudent. Usually, they demonstrate this by meeting certain cost-benefit tests (the real meat of this docket).
Normally, this wouldn’t be that problematic – but as we all know, the energy world is in a bit of a transition at the moment. Used to be, no one considered the cost of carbon when generating electricity. However, due to the environmental impacts of too much carbon dioxide building up in the atmosphere, that has changed.
Environmental impacts in general are not as easy to figure into the traditional math of energy. The KCC has to consider at least five different tests – the participant test, ratepayer impact test, program administrator test, etc. – that to varying degrees either completely ignore environmental costs, or make them central.
The KCC decided for now to allow use of those tests on a case by case basis, with an emphasis on the RIM test and the TRC test. Given the flux of the energy world right now, this will allow for some flexibility. They will also further consider these issues, and have extended the docket for 30 days to allow for more comment, to be followed up with a collaborative workshop process to try to reach as much consensus between the parties as possible.
There are also benefit-costs tests for the evaluation process. The Commissioners decided that this process should both measure tangible resource savings, as well as enforce program accountability. They will also extend the docket for thirty days on some of these more technical issues. They also considered the use of dynamic pricing for consumers – the use of smart meters, etc. – and decided that the costs of the meters had to be justified by tangible savings to consumers.
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Can citizens communicate with the Commissioners? Sure. Here’s their address and contact info, and feel free to drop them a line about your thoughts on energy efficiency.
— Maril Hazlett, www.climateandenergy.org
