4/20/2008

By DUANE SCHRAG

Salina Journal

America is power hungry.

While we use no more gasoline per capita than we did 30 years ago, we burn twice as much electricity. In fact, since 1950, Americans' personal use of electricity has increased almost tenfold -- from 474 kilowatt hours a person annually to 4,517 in 2006.

The increased residential demand in Kansas alone in the past 20 years is the equivalent of a 500 megawatt power plant. Nationally, it's the equivalent of 30 power plants the size of the ones being proposed in Holcomb.

So it's perhaps no surprise that legislators make comments like this:

"I think at this point we need to have everything that's available to us: we need wind, we need solar, we need coal, we need gas, we need everything," said Rep. Dan Johnson, R-Hays. "And if we don't do something we will soon start having brownouts, and grayouts and blackouts."

This claim -- that Kansas needs more electric generation -- goes to the heart of the argument in favor of the 1,400 megawatt of new coal-fired generation being proposed at Holcomb.

Utilities, whose profits often grow when electricity sales grow, routinely brush aside the assertion that efficiency and other demand-management measures could curb the rising demand for power.

Some even wonder if it's a good idea.

"I am very concerned that if we stall needed baseload power plants we will very soon find ourselves in the position of rationing electricity by price," Don Hellwig, general manager of DS&O Rural Electric Coop, wrote in an e-mail to an area legislator.

At a public forum this winter, Westar spokesman Jim Ludwig labeled the notion that efficiency/conservation could control growth as a myth. Westar executive Mark Schreiber repeated that claim more recently.

"We do not believe that energy efficiency/conservation can be implemented in sufficient quantity to create a zero or negative growth rate in electricity," Schreiber, director of government affairs for Westar, wrote in an e-mail this month to Rep. Charlie Roth, R-Salina. "... Although customers endorse energy efficiency and express a desire for it, there is little evidence that they have curbed their ever-increasing consumption of energy."

Maybe we can cut back

Actually, there is evidence they have. Nationally, growth in electricity use has been cut in half over the past decade. And in some states, energy efficiency programs have curbed consumption significantly.

In Vermont, which is widely regarded as having one of the most successful programs in the country, preliminary data suggests efficiency measures completely offset growth last year, according to Blair Hamilton, director of Efficiency Vermont, a nonprofit hired by the state to promote efficiency.

Rhode Island cut demand in 2006 by 1.3 percent, Connecticut by 1 percent. In Iowa, efficiency measures cut demand by 0.8 percent. Minnesota is shooting for 1.5 percent by the end of next year. Illinois wants to see a 2 percent reduction by 2012.

Since 2000, electricity consumption in Kansas has gone up an average of 1.25 percent a year.

Efficiency not popular

Efficiency measures are not particularly popular. A coal bill approved by the Kansas House and Senate originally required that new school buildings meet certain efficiency standards; that was stripped from the bill.

According to the federal Energy Information Administration, Kansas is one of only 10 states that as of 2006 (the most recent year for which national data are available) reported having zero cumulative savings from efficiency.

(But in 2006 Kansas did report efficiency savings for the first time: 30 megawatt hours. That's in a state that used 31 million megawatt hours. To put the Kansas figure in perspective: Iowa reported 302,000 megawatt hours in savings.)

We'd have to get serious

Rep. Josh Svaty, D-Ellsworth, says that efficiency measures can indeed delay the construction of new power plants, but only if they're seriously pursued.

"If the approach always is, 'We will build more,' then we never get serious about efficiency," he said. "I have not yet seen (the political will), and I'm not sure why."

Salina area legislators have shown varying degrees of interest in discussing what the state might do to promote energy efficiency.

"I think the state has a big role in energy efficiency," Roth said. "As we go about trying to change human behavior regarding how we consume energy, it is important that we don't do it by government mandate. Changes are best made when they are in a person's best interest."

That may explain why Kansas electric utilities have so far done so little to promote efficiency. Electric utilities -- which have seen per capita use climb for decades -- earn more profit the more electricity they sell.

"Standard ratemaking steers a utility away from initiating energy efficiency actions, some of which may be cost-effective," wrote Ken Costello, of the National Regulatory Institute in a paper that explores what is known as "decoupling" -- isolating a utility's profit margins from fluctuations in sales. "Or, when forced to promote energy efficiency activities, utilities will do so lackadaisically."

Utilities are candid about their lack of enthusiasm for efficiency.

"Starting approximately in the mid- to late 1980s there was a growing awareness among industry analysts, consultants and regulators that electric utilities had a strong financial disincentive to implement energy efficiency programs, primarily because such programs reduce sales and a utility's ability to earn the revenues needed to fully recover fixed costs," Westar said in a filing with the Kansas Corporation Commission. "One metric often cited by advocates of demand-side management programs is the historically low level of electric utility spending on such programs -- typically less than 1 percent of electric revenues for the majority of utilities."

But at the same time, they're not enthusiastic about having others head up efficiency programs.

"Westar believes it is preferable to have utility-administered (efficiency) programs, with the program designs -- including incentives -- approved by the (Kansas Corporation) Commission and the costs of approved programs recovered broadly from customers through traditional ratemaking methods," Westar said in a filing with the KCC.

And should utilities be offered incentives to implement these efficiency programs?

'Westar strongly believes that financial incentives are needed and appropriate," the company said.

Who gets the incentives?

The KCC asked an even more pointed question: Instead of offering utilities the incentives, would it be more efficient to offer them to consumers directly?

Westar replied that incentives to consumers are usually only part of the process.

"Utility-administered (efficiency) programs typically include customer incentives," it pointed out.

Kansas City Power and Light thought incentives would be more effective going to utilities rather than customers.

"KCPL believes providing incentives directly to the customer would be less efficient than providing those incentives to utilities," it wrote in its response.

It cited cultural resistance as one reason.

"Purchasing new energy-efficient products for replacement of current working products is inconsistent with the Midwest culture," it said.

Other reasons included a reluctance of consumers to adopt new ideas and limited knowledge about what products are available.

Svaty said that successful efficiency programs use both: utilities as well as outside organizations.

How Vermont did it

Like most states with energy efficiency programs, the state of Vermont started by putting utilities in charge of efficiency programs. But seven years ago it decided to contract with a third party for those services, with compensation based on reduction in electricity used.

Today Vermont has what is widely regarded as the most successful efficiency program in the country.

Sen. Pete Brungardt, R-Salina, thinks that approach is worth exploring.

"The Vermont notion is intriguing and probably could work here," he said. "I do not have firsthand knowledge of any work in Kansas on that model."

Most of the Salina area legislators agree the state should provide leadership.

"I do believe that we have improvements to make in this arena," said Rep. Deena Horst, R-Salina. "We need to begin crafting a comprehensive energy efficiency plan which can be, at the very least, marketed to Kansans. An independent agency/office would be a possibility, but would be more problematic as far as finding enough votes."

n Reporter Duane Schrag can be reached at 822-1422 or by e-mail at dschrag@salina.com.