Climate and energy

(Note: Harkins did not discuss either the weatherization funds – there will be a presentation on that Wednesday – or the possibility of KS competing for the additional energy grant funds available under the stimulus)

A stimulus bill can be stimulating, on many levels – and the energy dollars available have certainly stimulated a lot of discussion in KS over the past few weeks. (For a breakdown of the funds, click here.)

It can be a little confusing, but basically here’s how it works - (1) KS will be awarded a set amount, and (2) KS  can also compete for additional competitive dollars (over $2.1 billion total is available to competitive states).

The funds under (1) will be awarded through two agencies – (a) the Kansas Corporation Commission (KCC)’s Energy Programs Division, and (b) the Kansas Housing Resources Corporation (KHRC), which handles the weatherization of low-income homes.

Today, KCC Commissioner Joe Harkins came to discuss (1)(a). (1)(b) will be discussed on Weds. If (2) is on the schedule, I haven’t seen it yet.

Much of the details about these monies are still emerging – they are expected to arrive around 4/17/09, and programs may begin on or before June 1.

Commissioner Harkins’ main points:

- The KS goals of the energy stimulus $$ – to reduce energy consumption and thus emissions of CO2 and other polluntants and to stimulate local economies with activity from contractors, HVAC, auditors, construction, remodeling, etc.

- KCC expects $9.8 million under EE and Conservation Block Grants, $38 million to state energy program, and possibly $3.7 million in Appliance Efficiency Rebates.

- The KCC will funnel its funds into (1) expanding existing programs, and developing new ones that target residential and small commercial buildings.

• ESCOs for large industrial and large commercial buildings (existing) – Energy Services Companies evaluate and audit structures, and guarentee the energy savings if EE improvements are made. Building owners pay for the improvements out of the savings made.
• Expansion of Facilities Conservation Improvement Program (FCIP) (existing) – which allows public agencies to contract with ESCOs.
• Kansas SAVES – Smart and Verifiable Energy Savings (new) – Based on Midwest Energy’s How$mart Program, revolving low-interest loans for EE improvements to residential and small commercial buildings. Loans will be run through the utilities, but financed by banks (This is an expansion of the KEEP program, and will be run in partnership with KHRC).

- KCC will also (2) encourage the development of dynamic (ie, real-time) pricing for all energy consumers. Reasoning – depending on time of day, peak load, etc. etc., – a kilowatt hour can cost a lot more at one time than another. Logically, you want to use power when it’s cheaper, not when it’s expensive, and dynamic pricing allows you to do this.

- The KCC will also use the funds to develop a comprenhensive study of dynamic pricing, that would focus on – methods of cost recovery, rate re-design, bill format, infrastructure (smart meter) requirements, economic modeling, pilot projects, and customer education requirements.

Quotables from the Commissioner:

- “We do not intend to spend this money. We intend to invest it. Kansas will have the funds for energy efficiency on a permanent basis into our future.”

- “We measure energy efficiency in terms of how it helps us avoid building new generation. We are not spending any $$$ that does not produce measurable, verifiable results.”

- “We will use revolving loan programs – these are not grants. They are a huge opportunity, not a traditional government giveaway.”

- “We can’t encourage energy efficiency at the expense of the utilities – rate re-design will have to occur. We currently have rate structures opposed to energy efficiency.”

- “Smart meters are like people – they have IQs that range from very high to very low. You have to find the right one to work for you.”

Some details that leapt out to me -

- Commissioner Harkins acknowledged that using the utilities to help distribute the EE dollars would not necessarily help all KS ratepayers, because not all utilities will necessarily want to participate in these EE programs – “their utility might not choose to play”

- Rate re-design. Rate re-design. RATE RE-DESIGN. And did I mention… rate re-design? I could be entirely wrong, but this sounded like a pretty big deal to me. And there would appear to be a tension between the short-term stimulative purpose of the funds, and the long-term prospect of rate re-design.

- What is the interplay between the known $$ – the guarenteed stimulus dollars – and the unknown ones, ie, the competitive grant dollars? Ie, how can you truly get dynamic pricing underway without building a smart grid? And how can you build a smart grid in an economic climate without easy access to credit markets… and are the smart grid funds available instead under the competitive grants portion of the stimulus?

— Maril Hazlett, www.climateandenergy.org