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The Office of the Public Counsel says efficiency programs should be suspended to relieve financial strain on customers.
Missouri’s Office of the Public Counsel is urging state regulators to suspend utility energy efficiency programs as a way to ease the financial burden on customers dealing with economic fallout from the coronavirus pandemic.
Geoff Marke, the office’s chief economist, said in a filing late last month that regulators need to reduce Missourians’ bills however possible, even if, as he conceded in this case, it amounts to “a few cents” a month.
“As a matter of sound economic and social policy, every potential action should be on the table now to minimize the immediate and long-term stress placed on ratepayers and the economy,” Marke wrote.
Supporters of the programs defended them as potential cornerstones of the state’s economic recovery and accused the public counsel’s office of using the coronavirus crisis to target a program it has long been critical of.
“I know it looks like I am picking on energy efficiency,” Marke said in an interview. “But really, my recommendation is [to suspend] everything.” Should a utility ask to be reimbursed for grid enhancements like smart meters, for example, Marke said he would oppose that as well. “We need to minimize expenses as much as possible in anticipation that things will get worse.”
Marke made his suggestion as part of a rate case filed by Liberty Utilities-Empire District, but he used the opportunity to address efficiency and demand-side management programs for all three of the state’s investor-owned utilities.
Executive Director James Owen of Renew Missouri, a clean energy advocacy group, questioned Marke’s motivation.
“It’s no secret that the Office of Public Counsel doesn’t like the [Missouri Energy Efficiency Investment Act] statute,” he said, referring to the law that allows investor-owned utilities to earn a profit on money spent to subsidize customer investments in insulation, efficient appliances and the like. Although Liberty Utilities’ energy efficiency program wasn’t devised to comply with the act, Owen said the company has indicated it will seek permission in the near future to operate a MEEIA efficiency program.
Owen said he believes that Marke’s office “is trying to use this coronavirus issue to undo MEEIA or to weaken it. They want to stop MEEIA and are using this pandemic as an excuse to do so.”
The coronavirus pandemic and the economic turmoil it is causing mean that people are spending more time at home, making a better case for energy efficiency and resultant reductions in utility bills, Owen said.
Marke said he’s not opposed in principle to the energy efficiency law or utility-sponsored efficiency programs.
“I believe they absolutely can work,” he said. “As an economist, I come down on the opportunity cost.” Broadly speaking, utilities can generate more power than their customers need, he said, and wind is “really really cheap.” Efficiency measures “hit a point of diminishing returns, and it’s hard to scale up in a place like Empire [territory], where it’s largely rural.”
He pointed out that Liberty-Empire doesn’t typically use all of the funds it collects for energy efficiency, meaning that money it would collect from customers in the near term might simply sit in a bank account.
Liberty Utilities-Empire District provides electricity to about 154,000 Missouri residents. Liberty’s current budget includes about $1.25 million for energy efficiency. The company declined to comment on Marke’s proposal.
While Liberty customers typically pay only about 40 cents a month for the efficiency program, customers of Missouri’s larger utilities — Ameren Missouri and Evergy — generally pay from about $4 to $6 a month, depending on how much energy they use.
Evergy spokesperson Damon Smith said the company is committed to the value of energy efficiency benefits, even given the financial pressures resulting from the pandemic.
“Energy efficiency and demand response can be cornerstones that help customers save money as well as be more comfortable in their homes and businesses,” he said.
Ameren declined to comment on the proposed suspension.
An analyst with the American Council for an Energy-Efficient Economy predicted that suspending energy efficiency programs would not likely achieve any useful ends but might cause some problems.
Programs “cannot be turned on and off like a faucet,” said Dan York, a senior fellow for utilities and local policy. Resuming operations after a suspension might lead to higher costs, he said. And putting even a temporary halt to efficiency benefits might lead to reduced employment in that industry, which is already feeling the effects of the pandemic.
Looking at the longer term, he said, energy saved has proven time and again to be the cheapest “source” of power. Discouraging efficiency in the short term could lead to the need for more generation and higher costs in the long run.
Marke said he’d like Liberty’s energy efficiency program to be defunded until the company files its next rate case, likely to happen within a year. And as regards Ameren and Evergy, he said regulatory procedures would require a separate formal proceeding on the question of suspending their energy efficiency programs.
As of Wednesday, the Missouri Public Service Commission had not yet commented on the matter.