When it comes to energy efficiency in Missouri, the state’s largest utility has an offer state regulators can’t refuse.
Actually, the Missouri Public Service Commission can reject the proposal supported by Ameren Missouri to fund energy efficiency programs for the next three years and adopt a competing plan. But if it does, the commission risks seeing the utility walk away from energy efficiency entirely.
A 2009 Missouri law requires demand-side investments including energy efficiency and demand response to be treated the same as power plants and other supply-side resources. The goal: to make investor-owned utilities indifferent to how they meet customers’ electricity needs.
In return, utilities can seek to recover program costs and lost revenues and earn a performance incentive based on how good a job they do helping consumers save energy.
But while the law encourages utilities to pursue efficiency, it doesn’t establish a certain threshold of energy savings in the same way as Illinois and Michigan, which have energy efficiency standards.
The debate over efficiency standards versus voluntary energy savings goals has intensified over the past year after Indiana repealed its standard and Ohio put a freeze in place. Michigan, too, is debating whether to keep its efficiency standard. And the stakes over energy-savings programs figure to only increase with U.S. EPA’s Clean Power Plan expected out next month.
St. Louis-based Ameren, which sells electricity to 1.2 million customers in Missouri, hasn’t said what its next steps will be. But the utility has made clear that the law prohibits regulators from forcing it to offer programs that, in the utility’s opinion, hurt shareholders.
The case presents a dilemma for regulators, who yesterday opened a three-day hearing on the matter. Almost a dozen parties — utilities, consumer groups and clean energy advocates — presented their case.
‘A stretch goal’ for Ameren
The plan debated yesterday is the second proposed by Ameren since the energy efficiency law was enacted.
Under the initial three-year program that ends Dec. 31, Ameren has far outperformed the prescribed energy savings target of almost 800,000 megawatt-hours — the energy use equivalent of 96,000 homes. In just the first two years, energy use declined by 692,000 MWh at a cost of $76 million, or just more than half of the total proposed three-year cost of $145 million.
Ameren proposed targets for the second three-year plan in December based on a market potential study that it commissioned. The utility’s initial proposal called for a savings of 426,000 MWh during the second three-year cycle at a cost of $134 million.
After negotiations with parties in the case, Ameren reached an agreement with Kansas City Power & Light Co., the state Department of Economic Development and the Natural Resources Defense Council that was filed June 30. The agreement raised energy savings targets for the next three years by 37 percent to 583,000 MWh at a cost of $197 million.
"That 37 percent increase is a stretch goal for us," Wendy Tatro, an Ameren attorney, told commissioners.
The revised agreement also included specific provisions, including funding for low-income, multifamily dwellings and public buildings, as well as an agreement by Ameren to look at ways to increase energy savings during the three-year program life.
But another group of consumer advocates and environmental groups, including PSC staff, the Office of Public Counsel, the Sierra Club and Earthjustice, pleaded with the commission to reject the deal, saying it falls short of achievable energy savings and comes at too great of a cost to Ameren customers.
The proposal "is not even close to what Ameren could or should accomplish," Earthjustice attorney Jill Tauber said.
The groups opposing Ameren’s plan instead proposed an expert panel be appointed by a third-party mediator to establish the appropriate level of energy savings for 2017 and 2018.
At one point during opening statements, PSC Chairman Robert Kenney referenced the fact that the Missouri efficiency law doesn’t require utilities to offer programs, and asked the attorney for the Missouri Office of Public Counsel whether Ameren customers are better off having the plan proposed by the utility or none at all.
"Is something better than nothing, or is nothing better than the June stipulation?" Kenney asked.
Attorney Tim Opitz answered: "We would rather there be no program."