Coalition of eight utilities agrees to emphasize energy conservation

Coalition of eight utilities agrees to emphasize energy conservation

Sep 28, 2007 - Knight Ridder Tribune Business News
Author(s): Steve Everly And Karen Dillon

Sep. 28--

A coalition of eight utilities, including Kansas City-based Great Plains Energy, unveiled plans Thursday to emphasize energy conservation over building more power plants.

The initiative, which will likely need regulatory approvals, is designed to help save energy and the environment while boosting the bottom lines of the utilities. The move is one of the strongest indications yet that electric utilities, which traditionally have focused on building more power plants to meet demand, have softened that stance to include more energy conservation and renewable energy projects. It come amid rising concerns about global warming, which is widely considered to be caused in part by the carbon dioxide emissions from power plants. "It's been a dramatic sea shift in just the last couple of years," said Michael Chesser, chief executive officer of Great Plains, which is the parent of Kansas City Power & Light.

"This is worth pursuing." The plan calls for the utilities to boost their investments in energy efficiency projects, such as subsidizing the purchase of more efficient air conditioners, to $1.5 billion annually. If successful, the plan would eliminate the need to build 50 power lants in the U.S. The coalition's plans were announced Thursday in New York by the Clinton Global Initiative, backed by President Bill Clinton's foundation. "Today's commitment is indicative of the power of energy efficiency in addressing climate change," said Jim Rogers, chief executive of Duke Energy, one of the companies in the coalition and once a major critic of global warming theory.

"There has been a chronic underinvestment in energy efficiency in our country." The United States is last among industrialized nations in the amount of money invested in energy conservation, according to figures presented at a recent energy efficiency conference. Missouri and Kansas are among the lowest states in energy conservatio investment. Besides Duke and Great Plains, the other utilities in the coalition are Con Edison, Edison International, Pepco Holding, PNM Resources, Sierra Pacific Resources and Xcel Energy. Combined, the utilities have 20 million customers in 22 states. The utilities made a 10-year commitment to increase investments in energy efficiency.

The increase will eventually avoid about 30 million tons annually in carbon dioxide emissions from plants. About 6 million cars would have to be removed from the road o have an equivalent effect. The move was applauded by environmentalists. Melissa Hope, development director of the Sierra Club, Missouri Chapter, noted that KCP&L and its parent Great Plains are continuing to fulfill a landmark agreement made with the Sierra Club earlier this year to increase its investments in energy effici ncy and renewable energy. "Energy efficiency is the most cost-effective way to manage energy demand, to clean up our air by burning less dirty coal and to reduce CO{+2} emissions to address global warming," Hope said.

"Only by rejecting misguided plans for more coal generation a d committing to clean and renewable energy sources will Kansas and Missouri begin to benefit from the new energy economy." Just two years ago many utilities were major critics of the theory of global warming. Discussions of increased energy conservation and wind energy were almost nonexistent. Since then, private lawsuits against many utilities and increased scientific evidence have had an effect. Nowhere could that be seen more clearly this week than at the Kansas Renewable Energy & Energy Efficiency Conference in Topeka, where representatives of government, utilities, developers and farmers discussed the future of energy in Kansas.

They included three utilities: BPU and Westar Energy, which have been under federal investigation for possible violations of the Clean Air Act for failure to install state-of-the-art emission-control technology, and Sunflower Electric, which has faced c iticism for its plans to build two power plants. All three, plus KCP&L, are investing in Kansas wind farms. Kansas is trying to become a significant exporter of wind energy, said Geoffrey Coventry, vice president of business development at TradeWind Energy, a Lenexa-based company. The hope is Kansas will be able to produce tens of thousands of megawatts of electricity from wind farms in the next 20 years.

Just 100 megawatts of wind can supply 33,000 homes with electricity annually. Despite Thursday's announcement by the eight utilities, Steve Miller, a spokesman for Sunflower Electric, said the utility was continuing its plans to build its 1,400-megawatt plants in western Kansas. Miller said the company, which has conservation programs, also has data that show rural consumers use less electricity than urban consumers. Hope said that Gov. Kathleen Sebelius "should denounce and reject" Sunflower's plans. While voicing her personal opposition, Sebelius has said there is nothing she can do. KCP&L is currently building an 850-megawatt plant near Weston that will be completed in 2010, and once was mulling the eventual need for another plant as demand grows.

In an interview, Chesser said energy efficiency during the next decade should take care of additional demand and will be a "bridge" to when technology will be available to capture carbon dioxide emissions of power plants before they escape into the atmo phere. Among the efficiency programs that the utility would like to expand is a voluntary program that includes a free programmable thermostat that slightly raises the setting on peak summer days. The coalition is establishing an Energy Efficiency Institute, which will become part of the Edison Electric Institute group. Among other things, the institute will work with states to resolve regulatory difficulties.

Notably, the utilities want an economic incentive that will reward shareholders when the company prevents a kilowatt of power from being used, just as they are now rewarded when a utility produces a kilowatt. "A strong case can be made that they should be able to have a rate of return," said Jeff Davis, chairman of the Missouri Public Service Commission. That could be a sticky issue. James Zakoura, an attorney for industrial customers, said there may be support for a higher rate of return on those investments because of the social good. But utilities can expect scrutiny over whether they are curbing expenses elsewhere since they wil be selling less power.

"That is the issue," he said. To reach Steve Everly, call 816-234-4455 or send e-mail to severly@kcstar.com. To reach Karen Dillon, call 816-234-4430 or send e-mail to kdillon@kcstar.com.

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