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2007 CEO Forum: Greenhouse Gauntlet

Tackling climate change is a monumental challenge. Power-company CEOs discuss long-range plans for a climate-friendly energy economy.

Fortnightly Magazine - June 2007

has happened. But we need more of it. We can’t let it stop.

Chesser, Great Plains Energy: A potential barrier for utility companies is that the traditional planning process doesn’t accommodate energy efficiency, dispatchable loads, integration of two-way communication, and marketing of conservation resources. These things have not been part of the mainstream utility, and it will take strong leadership and commitment from the top of the industry to make that transformation. That could be as much of a barrier as the regulatory structure.

Back in 2003, when we saw load growing and the need to build additional capacity, we decided to do things 180 degrees different from the typical approach. Normally a utility would decide how to address load growth and then go to the public utility commission. We decided to talk to the commission first, and develop a straw man, our comprehensive energy plan. It included not only building a coal-fired power plant but also installing emissions controls at existing units to make total output lower than it is today. Also it included building wind energy facilities and pilot projects for energy efficiency and demand-side management.

This plan attracted broad support from community groups and legislators, but not environmental groups like the Sierra Club. They were resisting our plans to build a coal plant.

We approached the Sierra Club and asked them if, instead of fighting with us on the coal plant, can we get on the same side of the table and promote regulation to drive energy efficiency and renewables? Can we work more collaboratively? We talked about it and found a way to make it work.

[Editor’s Note: In March, KCP&L and the Sierra Club reached an agreement under which KCP&L will offset all the GHG of its new coal-fired power plant—about 6 million tons of CO2 a year— with investments in energy efficiency, renewable energy and emissions controls at existing plants. In return, Sierra Club will support KCP&L’s efforts to secure favorable rate treatment for investments in efficiency and environmentally friendly technologies.]

None of what we’ve agreed to do will happen unless we get proper rate treatment. This is not a ruse. It is a genuine commitment to collaborate. We’ve been collaborating with community stakeholders all along, but this gets the last holdout working with us. There’s no question they can accomplish more in collaboration with us. This is a good time for industry and environmental groups to be working together.

If we can get the regulatory compact right, investors will embrace that collaboration too. Already some investors are starting to take this up and are asking us what we are doing about energy efficiency and grid investments. They see potential earnings growth, whereas in the past they saw energy efficiency as just a loss. And ultimately they will see it as a lower-risk investment, because with the right regulatory compact I will have an easier time getting financing for an energy-efficiency strategy than for a nuclear power plant.

Holliday, National Grid: At the end of the day, Wall Street is interested in profitability, but it is