Kansas City Power & LightPosition on Benefit Cost Models

presented toKansas Corporation Commission

Sue Nathan

August 9, 2006

Topeka, KS

KCP&L’s Position• We view DSM as an alternative to supply resource that

receives comparable regulatory treatment.(Investment treatment/cost recovery/earnings)

• We are looking at DSM as an environmentally friendly resource.

• We believe any “test” applied to programs should consider broader criteria, more than just economic.

• We support the Total Resource Cost test as the screening tool for selecting potential DSM programs.

• We believe the utility is an efficient channel for these programs due to its relationship and trust position with its customers.

Things to think about…

• Programs need to be as cost effective as possible … but that should only be one criteria

• Programs should pass as many tests as possible … but they shouldn’t have to pass all tests

• Programs should meet both customer and company needs … but not be expected to meet all needs of all parties

• People have choices and do not always make economically logical choices

• We want to meet our customers’ and our needs.

Growth in our Service Territory

• We are primarily an urban/suburban utility

• High growth we are experiencing is mostly urban/suburban

• Kansas as a whole is more rural than we are

• We want to target our programs to our customers’ needs

Comprehensive Energy Plan

Balanced Portfolio of Programs

Program Type Low Income Residential Sm Comm Med Comm Lrg Comm

Affordability

-Affordable New Homes Dir Impact

- Low Income Weatherization Dir Impact

Energy Efficiency

- Res Online Information & Analysis Educational

- Home Performance w/En Star-Tng Educational

- Change a Light, Change the World Dir Impact

- Cool Homes Dir Impact

- Energy Star Homes Dir Impact

- Comm Online Information & Analysis Educational

- C&I Audit Rebate Educational

- C&I Custom Rebate - Retrofit Dir Impact

- C&I Custom Rebate – New Const Dir Impact

- Building Operator Certification Dir Impact

Demand Response

- Energy Optimizer (A/C Cycling) Dem Resp

- MPower (C&I Curtailment) Dem Resp

Our Preference for a benefit cost test:

• Total Resource Cost test….. Why?– More comprehensive– Looks at EE as resource option/level

playing field– Looks at EE more as a business

Besides avoided capacity and energy costs, others benefits of EE include:

• Reduced line losses for capacity and energy• Avoided or deferred distribution and

transmission upgrades• Avoided firm transportation charges• Diversity of portfolio• Hedging for potential future costs• Skill set development• Healthier economic community benefits

customers and company

No time like now to get started

• Look longer term• Provide a level playing field for DSM

and power plants • Use the TRC test to screen potential

DSM programs • We are looking forward to working with

the State on implementing DSM programs