KCP&L Plan Shifts to Efficiency

The following excerpt is from an article in today's Kansas City Star about a local electric utility, Kansas City Power and Light (KCP&L), that is making energy efficiency a part of its business model.  Previously, KCP&L's energy efficiency efforts were done primarily for public relations.  But a new Missouri law makes it profitable for KCP&L to pursue energy efficiency seriously.

The following excerpt gives an idea of what the article is about.  More details are available in the complete article.

KCP&L plan shifts to efficiency, seeks payback for saving energy

By STEVE EVERLY

The Kansas City Star

Friday, December 23, 2011

Kansas City Power & Light, in a historic shift for the utility, filed plans Thursday with Missouri regulators to sell less electricity.

The company, like other utilities in the region, has depended on selling electricity to recover its costs and earn a profit. Building more power plants was the gauge for its success. Its conservation efforts, such as rebates to customers for buying energy-efficient air-conditioners, were pilot programs and not part of KCP&L’s long-term plans.

But the company says it’s time for a change, for energy efficiency to take on a more serious role. So its latest plan takes advantage of new Missouri regulations that make it possible for utilities to curb consumption and not be penalized financially.

And customers, though they might pay higher rates initially to help cover the upfront costs of conservation efforts, are expected to eventually see lower rates after the efficiencies start paying off.

The combination, say the utility’s officials, convinced them that for the first time energy efficiency should have an official place in its business plans.

The plan, as conceived, would ensure a sustained program that includes rebates for commercial and residential customers who buy energy-efficient equipment and lighting. There would also be rebates for disposing of inefficient air-conditioners and refrigerators. Other programs include telling residential customers how their electric usage compares with others in similarly sized homes, and what can be specifically done to reduce consumption.

KCP&L would give the program $25 million a year, which would be expected to eventually save the utility much more than that. The rule of thumb is that it costs one-fifth as much, or less, to eliminate the need for a kilowatt of electricity as it does to produce that much electricity. So the savings could amount to hundreds of millions of dollars over a few years.

A problem in the past has been figuring out how to encourage utililty convervation efforts, because they reduce electricity sales and thus cut into revenue. In addition, utilities haven’t always been able to build the costs of conservation efforts into their electricity rates.

But in 2009, state legislators passed the Missouri Energy Efficiency Investment Act, which called for treating investments in curbing consumption in the same way as investments to deliver electricity. It took a couple of years to work out the regulations to put the law into effect, including how to measure energy savings.