Missouri can improve its energy efficiency, nonprofit says
Missourians spend more per person to heat, cool and power their homes and businesses than 44 other states.
Can the Show-Me State do better?
The American Council for an Energy-Efficient Economy, a nonprofit group based in Washington, thinks it can and has taken a special interest in Missouri.
The group, also known as ACEEE, in a recent 112-page report laid out its case that by 2025 the state could slash electricity consumption by 17 percent and natural-gas usage by 13 percent. A whole range of measures could help, the report said, including rebates for more efficient heating and cooling equipment, and devices that briefly cycle off air conditioners during hot summer days.
The cuts in consumption are an ambitious target given that Missouri has traditionally been in the bottom tier of annual rankings for energy efficiency programs and policies. The state — and Kansas has been similar — traditionally has enjoyed relatively inexpensive energy, making energy efficiency less urgent and more difficult to get people to adopt.
But the energy efficiency council thinks there’s reason to be optimistic about Missouri’s prospects.
“The reason we chose Missouri is, we saw political will to get some of this done,” said Suzanne Watson, the group’s policy director.
Conservation initiatives have popped up around the state, including the Green Impact Zone in Kansas City. Some counties are beefing up building codes to curb electricity and natural gas consumption. State government buildings have been renovated to use less energy as well.
But it’s the Missouri Energy Efficiency Investment Act that could really change how energy efficiency is dealt with in the state. The law was enacted in 2009, and most of the regulatory language is now in place. Some utility proposals to take advantage of the law are expected this year.
The law allows utilities to recover the cost of energy efficiency programs, such as rebates for efficient air conditioners. In addition, it establishes the regulatory framework for utilities to recover revenue that will be lost because of the lower demand. In the past, the loss of such revenue has been a huge obstacle in persuading utilities to encourage efficiency.
Kevin Gunn, chairman of the Missouri Public Service Commission, said the approach upended the traditional business model for utilities, which relied on building more power plants to meet higher demand. Although utilities will be allowed to request recovery of lost revenue, consumers are expected to benefit somewhat, because saving energy still costs less than adding more generation.
The shift in regulations should be a big boost to energy efficiency in the state. Gunn said, “We certainly have a lot of potential in Missouri to do it.”
The energy efficiency council agrees, saying the change in business model is important for encouraging conservation despite the region’s lower energy costs.
In 2009, according to the federal Energy Information Administration, residents of Missouri paid an average 8.5 cents per kilowatt-hour, compared, for example, with California at 15 cents per kilowatt-hour.
Recent rate increases by Kansas City Power & Light and other Missouri utilities have narrowed the gap slightly, but the state’s utilities still offer power at prices below the national average.
Meanwhile, natural gas prices have at times been volatile, spurring some conservation. But they have been lower over the past couple of years and are now the cheapest fuel for heating. Forecasts call for natural gas to have stable prices for several years.
Despite the benefits of low energy prices, many of the state’s utility customers still struggle to pay their utility bills, especially in a sour economy. And the energy efficiency council maintains that the economic benefit of lower energy prices isn’t as great as many think, because that also spurs more usage. Residential and commercial buildings in Missouri consumed an average 158 million Btu per capita annually, or just over 20 percent more than the national average of 130 million Btu.
Missourians spent $12 billion to heat, cool and power their homes and businesses last year, which is more than the $10.5 billion they paid in state taxes. Toss in fuel used for transportation, and the amount spent on energy is 2.5 times the state tax bill.
Despite those hefty numbers, “we haven’t seen a whole lot of appetite for efficiency in Missouri,” said Watson of the council.
Indeed, last year the state was ranked 43rd in the country in the group’s annual energy efficiency score card, which gives points for several things, including utility and public energy efficiency programs, and building codes. Out of a possible 50, Missouri got six points. Kansas was even worse with five. The best score went to California with 45.5 points. The worst was North Dakota at 1.5.
The states in the scorecard’s bottom tier, including Kansas, have relied more on education to encourage efficiency. Kansas also has considered a regulatory approach somewhat like Missouri’s but so far hasn’t enacted it.
Kansas has used federal economic stimulus funds for energy conservation and is looking at expanding the program with utilities and private financing teaming up for energy efficiency projects. Serious discussions also are continuing about a more aggressive energy efficiency policy in the state.
“Energy efficiency has to be part of the state’s energy portfolio,” said Jesse Borjon, a spokesman for the Kansas Corporation Commission.
In Missouri, the energy efficiency council has high hopes, with the state already demonstrating increasing interest in energy efficiency. In Kansas City, a Green Impact Zone aims to transform a midtown neighborhood, in part by slashing energy use 35 percent.
But overall the state is still struggling, and recently some utilities have scaled back or ended rebates for more efficient heating and cooling equipment. The new regulatory framework is expected to re-energize those efforts, according to the energy efficiency council report.
“We remain optimistic it can work,” said Watson.
The approach is already being used in some other states. In Missouri there’s some quibbling between utilities and regulators over how to measure the energy savings, which is crucial in calculating lost revenue. But some utility proposals are still expected by the end of the year.
It’s not mandatory for the state’s utilities to participate, but KCP&L has indicated that it will. It recently ended its rebates for efficient air conditioners and heat pumps, but they probably will be restarted, along with other programs to help curb electricity consumption.
“We believe that Missouri has taken a leadership position,” said Chuck Caisley, a spokesman for KCP&L. “We are very excited.”
-Steve Everly
