Joint Push for Energy Efficiency; Proposal under Consideration Would Allow Ameren to Profit by Helping Consumers Reduce Power Usage

By Tomich, Jeffrey | St Louis Post-Dispatch (MO), July 11, 2012 | Go to article overview

Joint Push for Energy Efficiency; Proposal under Consideration Would Allow Ameren to Profit by Helping Consumers Reduce Power Usage


Tomich, Jeffrey, St Louis Post-Dispatch (MO)


The business model for electric utilities has always been simple. They made money selling power to run electric devices, from city streetcars in the 1920s to today's iPads, smartphones and plasma televisions. The more energy they sold, the more money they made.

But if state regulators approve an agreement between Ameren Missouri utility and various consumer advocates and environmental groups, the utility will soon have a new profit motive - helping those same customers save energy.

The agreement represents the most ambitious energy efficiency plan ever proposed in the Show-Me state, and the product of years of debate over how to encourage utilities and consumers to work together to reduce electricity use.

"It's a shift toward an energy policy where we partner with our customers," said Warren Wood, Ameren Missouri's vice president of legislative and regulatory affairs.

The three-year plan would directly cost Ameren's customers about $145 million. Consumers would also reimburse Ameren for tens of millions of dollars in fixed costs - investments in power plants, poles and wires used to generate and distribute electricity - that the utility wouldn't recover if energy sales decline.

The Public Service Commission hasn't yet scheduled a vote on the plan, but it will host a public presentation on it Monday in Jefferson City. Ameren hopes to launch the efficiency program in January.

Under the proposal, a residential customer who uses 1,000 kilowatt-hours a month would see electric rates rise by roughly $2 to $3 a month, or about 3 percent based on current rates. The increase represents about 20 percent of the $376 million, 15 percent rate increase that Ameren is currently seeking.

But unlike ordinary rate increases where consumers are asked to pay a higher price for the same services, money spent on energy efficiency will produce huge benefits, utility and consumer advocates say.

"Both the utility and ratepayers are going to win because the benefits are so huge," said Rebecca Stanfield, a senior energy advocate at the Natural Resources Defense Council.

For instance, Ameren estimates the proposed three-year efficiency program will save an estimated 800,000 megawatt-hours by 2015 - the equivalent of the energy consumed by 60,000 homes over the same period.

In financial terms, those savings equal almost $500 million in fuel not burned and power plants and transmission lines not constructed - benefits to be shared by Ameren and its customers.

Public Counsel Lewis Mills Jr., Missouri's consumer advocate in utility cases, is among those who signed off on the program. He said the efficiency programs would benefit everyone, not just those who directly participate by avoiding, or at least deferring the need for new power plants.

"Even if you are not one of the customers to get a rebate, the energy delivered to you over the long term will be cheaper because of the energy your neighbor isn't using," he said.

Just as important, the benefits of reduced energy use, such as an energy efficient furnace, will last far beyond the three years that consumers are asked to pay for the efficiency programs. …

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