Missouri utilities move forward with on-bill energy efficiency funding

Ameren offers a Pay As You Save program that would save customers the upfront cost of energy efficiency projects.

Missouri’s largest electric utility plans to provide 1,000 of its customers with access to energy efficiency improvements, minus the often substantial upfront cost.

Instead, Ameren Missouri will pay the initial cost and then add a small portion of it to the customer’s monthly bill. In theory, the customer’s total bill goes down as the energy savings outweigh the cost of reimbursement.

The concept of invoice reimbursement is known as Pay As You Save, or COUNTRY, and the other two investor-owned utilities in Ameren and Missouri are in various phases of program development or review at the asks state regulators.

Ameren filed a document with regulators in mid-May requesting permission to offer the funding mechanism on a trial basis for 12 months from January 1, 2022. Evergy is working on details of a 12-month pilot that the State regulators approved it in January as part of a larger energy efficiency program. Company spokesperson Damon Smith said the COUNTRY experiment will take place before the end of 2022. Liberty Utilities-Empire District is also considering launching a pilot project, spokeswoman Jillian Curtis said.

The utility commissioners took interest in the bill rebate system a few years ago after lobbying the state Public Council Office and Renew Missouri, a nonprofit clean energy advocate. Regulators have required the three utilities to hire a consultant to assess the bill reimbursement protocol. The consultant, the Cadmus Group, said COUNTRY could work well for all three.

While the COUNTRY approach has been praised for removing the barriers that appear to prevent tenants and low-income people from investing in greater efficiency, Ameren will not specifically seek out these clients. Rather, it will target funding to customers with the greatest potential for reducing their energy use – those who use the most energy, said Bill Davis, director of energy solutions for the company.

He imagines someone “maybe older, who has some kind of electric heater, probably outdated. There is probably very little ceiling insulation in this house, and probably very little airtightness around the windows. windows and doors Probably not a lot of LED lighting.

COUNTRY only works financially for properties that are very inefficient initially.

“You have to generate enough energy savings to pay for the upgrades,” Davis said. The COUNTRY protocol is very specific: it will only cover improvements for which the cost of installing the measures does not exceed 80% of the savings in bills estimated over 80% of the life of the measures.

The remaining 20% ​​of the monthly bill savings goes to the electric bill payer, whether owner or tenant.

While properties with lower savings potential could be considered, Davis said the bill payer in these cases would likely have to make a modest monthly payment for upgrades rather than getting a small refund.

In the case of his example above, Davis said, “If you went with an air-source heat pump and insulation and switched to LEDs, it would generate huge savings that would more than cover the cost over time. time”.

The program budget includes $ 5 million to cover the cost of upgrades and related services, an additional $ 500,000 for a larger portion of the energy efficiency discounts the company is already offering to all of its customers, and 1 , $ 5 million for administrative costs.

While some utilities seek investors to provide funds for COUNTRY programs, Ameren will incur additional debt to fund the pilot project, according to Davis.

“If this develops,” he said, “this is an issue that we will have to explore further.”

He said the pilot’s budget should cover the costs of around 1,000 of the company’s 1 million customers.

Once a client has been accepted, an administrator hired by Ameren will take care of everything. If it does not find any structural problems, it will perform an audit, a blast test and determine the potential savings and the most effective measures.

If the owner wants to proceed, the administrator will recommend specific actions, hire a contractor, and schedule and pay for the work from the $ 5 million he borrows for this purpose. Ameren will then put a small line on the client’s monthly invoice until the work has been paid.

One of the unusual things about PAYS is that it is not a conventional loan. No credit check is required. The unpaid bill remains with the property and is the responsibility of the occupant or owner who pays the electricity bill. Ameren owns the improvements until they are paid for.

Pay As You Save is structured to provide almost a reduced monthly utility bill as it allows upfront funding only for upgrades which in most cases are guaranteed to deliver savings above cost which means that the total monthly bill in the vast majority of cases is lower after upgrades than before they are made.

Outside of Missouri, COUNTRY programs operate in 18 utilities, mostly rural power co-ops, in eight states. Two utilities that reported Success are Midwest Energy, a cooperative in Hays, Kansas, and Ouchita Electric Cooperative in southern Arkansas.

There are invoice refund systems similar to the PAYS branding system. Georgia Power, an investor-owned utility, got permission from state regulators a few weeks ago to conduct a bill reimbursement program that looks like COUNTRY. This is part of the latest integrated resource plan for this utility. It is aimed at people with low incomes.

In Missouri, Ameren’s pilot will only be a ‘proof of concept’ and, if adopted long-term, PAYS could be changed to target tenants and low-income households, Geoff Marke said. , chief economist of the State Office of Public. A long-time advisor and passionate about COUNTRY. These populations have not benefited from efficiency at the level of people with higher incomes and having their own housing. Marke thinks COUNTRY could change that.

He also envisions that COUNTRY plays an important role in the very fluid balance of supply and demand for Ameren. The utility is developing an integrated resource plan, due this fall, that will address the future of two big and dirty coal-fired power plants, the Rush Island Energy Center and the Labadie Energy Center. Last September, a federal judge called on the company to fix the Clean Air Act violations by installing scrubbers at the two coal-fired power plants. The bill would likely exceed $ 1 billion. Some observers argue that Ameren was slow to respond.

Marke sees a “perfect storm” on the horizon. Rather than making a huge investment in the two coal-fired power plants, he said the company should look to renewables and ways to reduce demand for electricity.

“Something like COUNTRY,” he said, “could be a very attractive option. “

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