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Posted on Wed, Jan. 31, 2007
By STEVE EVERLY
The Kansas City Star
Utility Summit in KC
57 executives to meet today
Seeking ways to control our energy growth
Companies are considering much more aggressive conservation measures.
Utilities from across the country are gathering in Kansas City today to consider what could be the most ambitious effort ever undertaken to curb the U.S. appetite for electricity.
The meeting, which has been quietly put together and is not open to the public, will draw 57 top executives from investor-owned, municipal and federally owned utilities including most of the country’s major electric utilities.
It comes at a time when utilities are facing more pressure to reduce carbon dioxide emissions, which contribute to global warming. Coal-fired power plants are a major contributor of carbon dioxide.
The Kansas City meeting is being held as a shift appears to be taking place in the industry. Instead of relying solely on producing more power to meet demand, more utilities see reducing consumption, or at least curbing the rate of growth, as crucial for the future.
"This is a big deal," said Clark Gellings, vice president of innovation for the Electric Power Research Institute. "It will probably result in the biggest collaborative effort on this issue ever."
The institute, a nonprofit energy research group, already has had discussions with the utilities, and its board in August decided that it was time for a meeting to bring the utilities together. Michael Chesser, the chairman of Great Plains Energy Inc., which owns Kansas City Power & Light, serves on the institute's board of directors and suggested holding the meeting in Kansas City.
Utilities have for years sponsored educational campaigns encouraging conservation, but the response has been mixed at best. Many utilities are now looking at being more aggressive, especially by subsidizing the cost of energy-efficient equipment and the other measures that could reduce the number of power plants that need to be built.
California, which has taken such an approach, has kept electricity demand flat in recent years. For the U.S. as a whole, the Energy Information Administration is projecting electricity consumption to increase by 1.5 percent annually through 2030. An estimate prepared by the Electric Power Research Institute suggests that the rate of growth could be shaved by one-third, to about 1 percent.
Key in that outlook is the Midwest, where electricity prices are relatively inexpensive, making energy conservation generally less economically attractive. But there are signs that conservation is being taken seriously by Midwestern utilities as well.
KCP&L is building a new coal-fired plant near Weston, which is scheduled to be in operation by 2010. But the utility also is considering stepping up its conservation efforts to a level that would absorb much of the currently projected increase in demand from 2010 to 2015.
"We think this makes a lot of sense," Chesser said.
The utility recently wrapped up a pilot project that offered rebates for customers who replaced incandescent light bulbs with more energy-efficient compact fluorescent bulbs. The utility estimates that if each customer replaced just one bulb it would prevent 72,000 tons of carbon dioxide emissions per year.
Gellings, who eschews the phrase "energy conservation" because it brings to mind having a "warm beer and a cold shower," said being more energy efficient does not mean austerity. He estimated that 10 percent of today's electricity consumption, and possibly more, could be easily eliminated.
He said he hoped the meeting would produce guidelines for how the industry could proceed. A big issue will be how to pay for the energy efficiency. Traditionally, utilities have made profits by building new power plants, because regulators let them recover the construction costs plus some rate of return. In some fashion, utilities will have to be able to recover their costs for the energy-efficiency projects as well as maintain a profit. That could generate opposition from consumers, who fear paying more for less.
But the industry probably will argue that customers who reduce consumption still will be likely to save on their energy bills, and even those who don't conserve could benefit.
In any case, the Kansas City meeting indicates that electric utilities have concluded that it's time to get serious about reducing demand.
"This is a sea change for the industry," Gellings said
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