CEP supports incentives for utilities to pursue all cost-effective electricity savings and avoid unnecessary expenditures on generation and grid additions.
Kansans, like all Americans, face skyrocketing fuel and commodity prices, reliability concerns, and an antiquated grid in need of extensive updates. In the face of all this – and amidst a worsening financial crisis and concerns about pollution in general and climate change in particular – it is time not only to remove perverse incentives but to actively encourage our utilities to sell less rather than ever more energy.
We encourage the KCC to align shareholder and customer interests in reducing use and bills. The NARUC National Energy Efficiency Action Plan states the goal well: “modify policies to align utility incentives with the delivery of cost-effective energy efficiency,” by “addressing the typical utility throughput incentive and removing other regulatory and management disincentives to energy efficiency.”
Our state’s regulated utilities have the power to influence the pace of energy efficiency improvements both directly and indirectly. If our investor-owned utilities embrace energy efficiency as a business model – which they will do only as their shareholders receive a dependable return – they can not only deliver proven programs but also shape state and federal standards and tax credits as well as their customers’ attitudes toward personal efficiency investments and conservation.
With proper incentives, our largest utilities can lower bills for most Kansans, spurring local economic development and preserving our environment and our future options in the process.
News Updates: Another KS coal proposal? the poor PTC, KEC hearing today, MO voters to consider mandatory RES, incentive rate for transmission
September 30, 2008
Given the events of the past couple weeks on Wall St and in Congress… that’s frankly the news I have been following (in horror).
Time to catch up on clean energy news, though. Keep track of the sunshine. Don’t let the rain get you down… etc. I’m sure there’s a country music lyric that suits the situation but can’t think of it at the moment.
Alternative proposal for a new coal plant in Kansas (Clay Center Dispatch). Quotable: “Unless the small town members of the Kansas Power Pool are able to negotiate long-term electric supply contracts with major energy suppliers, the organization would be justified in constructing its own coal or nuclear plant in Kansas, Colin Whitley, KPP general manager told Clay Center Rotarians Thursday noon.”
PTC hanging in limbo (not unlike the current status of the bailout package) (NYTimes). To understand better how the Production Tax Credit is wrapped up with other tax initiatives, you’d best read the whole story. The main point:
“Tax credits for investing in solar energy and producing wind energy will expire at the end of the year unless Congress resolves the impasse, and lawmakers said they saw no immediate prospect of an agreement.
“The deadlock comes at a time when economists and politicians of all stripes are saying the United States must rapidly develop solar, wind and other energy sources as alternatives to oil.”
First Kansas Energy Council public hearing on 2008 policy recs set for today in Wichita (LJWorld). While the bulk of public reaction has been regarding the proposed reduction of the KS speed limit from 70 to 65, there’s a lot more to these recommendations than that. Greenhouse gas reductions, etc… Pay attention. There’s a lot of recs to keep track of.
Editorial – Missouri’s RES/ Clean Energy Initiative sets good goals (KCStar). As many of you know, MO currently has a Renewable Energy Standard (RES) on the ballot for voters to consider in November. It will mandate that investor-owned utilities get 15% of their electricity from renewable sources by 2021.
For transmission junkies – NYState and FERC come to interesting agreement on incentive rate reimbursenment for major transmission line (Windpower Law).
Well – there was a LITTLE bit of sunshine in there. Depending on your view through the window, I expect.
— Maril Hazlett, www.climateandenergy.org
Press Release: CURB on Westar rate case, proposal of new rate design, and recommendation on green pricing
September 30, 2008
Reprinted in full from CURB Press Release:
CURB trims fat from Westar rate request, encourages conservation
September 29, 2008 – Topeka, Kansas.
Today, the Citizens’ Utility Ratepayer Board (CURB) filed Direct Testimony with the Kansas Corporation Commission in response to Westar Energy’s request for rate increases of $87.58 million for its Westar South division customers and $90.04 million for its Westar North customers. (Docket No. 08-WSEE-1041-RTS).
Andrea Crane, CURB’s accounting consultant, recommended that the KCC limit the increases to $56.7 million for Westar North, and to $44.77 million for Westar South, figures which include $27 million in environmental expenditures that has already been approved by the KCC for inclusion in rates.
While Ms. Crane acknowledged that Westar’s recent investments in additional generation justify additional revenues, she objected to the company’s claims for executive compensation and benefits, costs of construction for plants not yet in service, storm-related costs and the level of profits requested for shareholders, stating that they were excessive. She recommended a 9.59% return on equity for shareholders, which would pare $16.4 million from the Westar North increase, and $15.3 million from the Westar South increase.
Michael Majoros, CURB’s depreciation consultant, recommended removal of approximately $6 million in depreciation revenues from the rates of both Westar divisions, citing Westar’s failure to provide sufficient evidence to support its requested increase in depreciation rates for both divisions.
Stacey Harden, CURB’s regulatory analyst, recommended numerous revisions to Westar’s energy-efficiency programs to improve accountability and cost-efficient use of funds contributed by ratepayers. She also recommended that the KCC revisit its approval of Westar’s so-called “Green Tariff” because no additional green energy will be provided with the revenues collected under the tariff beyond that which is already being paid for by Westar’s customers.
Brian Kalcic, CURB’s rate design analyst, recommended a rate structure designed to accomplish two broad goals of the Board. First, so that low-usage customers and fixed income seniors continue to have access to affordable electricity as utility costs increase, the rate for the first 900 kWh of use is maintained at an affordable level. Second, to encourage higher-usage customers to invest in conservation measures to reduce their usage, the rate for usage above 900 kWh is more expensive.
“The cost of providing electric service is increasing as customers are putting more demand on the electric utility system,” said David Springe, Consumer Counsel for CURB. “The Board’s recommendations in this case recognize that rates need to go up to reflect increased costs, but we are also recommending that the Commission trim the fat from shareholder profit and executive compensation.”
The Board’s rate design proposals, he said, are designed to help reduce costly demand on utility facilities. “The Board believes it is time to stop talking about conservation and start acting to achieve conservation,” Springe said. He noted that, “The existing rate structure is a legacy from when utilities had excess base load generation and consumption was thus encouraged. CURB’s rate design, if adopted by the KCC, will encourage conservation and reduce the growth in our usage, while maintaining affordable rates for those most challenged by today’s economic environment.”
Springe also warned that Westar customers are facing other rate increases that will appear on customer bills, regardless of the outcome of this case. According to Springe, the cost of natural gas to run the new Emporia Energy Center and over $20 million per year of wind energy purchases are being added to the fuel cost adjustment on consumers’ bills. He added, “The cost of transmission upgrades currently being constructed is going to show up in one line item on the Westar bill, and expenditures on environmental upgrades to Westar’s coal plants will show up in another line item.”
“Regardless of how much of the $177 million increase requested by Westar will actually be granted by the KCC, consumers will see tens of millions of dollars of rate increases through these other line-item charges created by the legislature and the KCC,” said Springe.
Reprinted in full from the Eagle:
MARK PARKINSON: MOVE PAST FAILED PROPOSAL
In response to the commentary by Earl Watkins, CEO of Sunflower Electric Power Corp. (“Holcomb would help supply base-load power,” Sept. 26 Opinion): Last year Sunflower Electric insisted that we build two large coal plants for Colorado and Texas. In return, Kansas would get 100 percent of the pollution, give up 100 percent of the water and only get 15 percent of the electricity.
Sunflower told us this was necessary to keep electric rates low. Sunflower is wrong. Its ratepayers would have to pay — not only for the health costs associated with coal plants but for the financial costs of future federal carbon regulation.
Sunflower told us that without the coal plant, transmission lines would never be built in Kansas. Sunflower was wrong. For the first time in 30 years, there are five transmission projects in development.
Sunflower told us that without the new transmission, we wouldn’t have new wind farms built in Kansas. But in two short years, we have nearly tripled our wind power in Kansas from 364 megawatts to 1,013 megawatts by the end of 2008.
Sunflower told us that without its coal plant, Kansas wouldn’t have enough base-load power. But according to Sunflower’s own documents, it has enough base-load power to last until the year 2019, at which point it would be short only 176 megawatts.
Sunflower’s argument has been reduced to this: Because we need 176 megawatts of power 10 years from now, we must immediately build 1,400 megawatts for Colorado and Texas.
By Sunflower’s own admission, even if the company built these plants, Kansas will still need power in the future. I think we should take care of Kansas customers and Kansas power needs first.
In the next 10 years, Kansas customers will need about another 600 megawatts of power. That is why Gov. Kathleen Sebelius offered Sunflower a compromise: Let’s build a smaller plant that places Kansas’ energy needs first, while still generating some power for export. Sunflower rejected that proposal.
It’s time for Sunflower Electric to move past the failed proposals of the past and move forward toward a new business model, one that recognizes the changing market in fossil fuels and embraces Kansas — its wind, its customers and its future.
Lt. Gov. MARK PARKINSON
Topeka
