In 2009, the Missouri General Assembly enacted the Missouri Energy Efficiency Investment Act (MEEIA) with the support of both parties, and with the support of utilities, consumers, and environmental advocates. MEEIA is a monumental piece of legislation that has paved the way for significant increases in utility-designed energy efficiency programs. MEEIA allows utilities to earn a profit on the electricity saved as a result of energy efficiency programs and incentives they offer to their customers. The law increases investments in energy efficiency, decrease Missourian’s energy bills over time, avoids or delays the need for constructing future power plants, and reduces our State’s reliance on coal and other fossil fuels.
While many states have mandatory energy efficiency targets that regulated utilities must meet, MEEIA is voluntary. Instead, utilities are motivated to participate in MEEIA because the statute authorizes a cost-recovery structure that allows utilities to value efficiency on par with investments in traditional resources.
The MEEIA statute provides:
3. It shall be the policy of the state to value demand-side investments equal to traditional investments in supply and delivery infrastructure and allow recovery of all reasonable and prudent costs of delivering cost-effective demand-side programs. In support of this policy, the commission shall:
(1) Provide timely cost recovery for utilities;
(2) Ensure that utility financial incentives are aligned with helping customers use energy more efficiently and in a manner that sustains or enhances utility customers’ incentives to use energy more efficiently; and
(3) Provide timely earnings opportunities associated with cost-effective measurable and verifiable efficiency savings.
Through the above-stated policy, MEEIA makes energy efficiency a win-win for all parties involved. The key to MEEIA is the way in which it switches the utility’s incentive away from selling more energy, and toward helping customers save energy. MEEIA puts in place a 3-tiered cost recovery framework (the “3 legs of the stool”) so that utilities are held harmless from reduced sales and may even turn a profit. First, MEEIA allows utilities to recover the cost of running their efficiency programs (Leg 1). Next, utilities can recover the revenue they lose due to their customers savings energy (Leg 2). And finally, utilities have the opportunity to earn a profit if their programs are successful, just as they earn a profit on traditional investments in generation (Leg 3). These three methods of cost recovery – program costs, lost revenue recovery, and earnings opportunity – allow utilities to treat energy efficiency on par with investments in traditional resources.
Energy efficiency is almost always the least costly resource in which utilities can invest; a kilowatt-hour saved from efficiency is cheaper than building a new power plant to meet customer demand, and often cheaper than producing a kilowatt-hour from an existing power plant. Efficiency has the potential to replace or delay future power plant investments, which benefits all consumers in the long run.
- Ameren Missouri
- Kansas City Power & Light
- KCP&L-Greater Missouri Operations
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- KCP&L-Greater Missouri Operations – Case Number EO-2016-0251
- Ameren Missouri – Case Number EO-2015-0210
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- KCP&L-Greater Missouri Operations – Case Number EO-2015-0305
- Ameren Missouri – Case Number EO-2014-0241
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