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AEP utilities seek incentive for energy efficiency programs

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Appalachian Power and Wheeling Power want a financial incentive for the energy efficiency programs they offer customers.

The companies made their case in an April 1 filing with the Public Service Commission of West Virginia.

Both AEP's Appalachian Power and Wheeling Power and FirstEnergy's Mon Power and Potomac Edison have in recent years established basic energy efficiency programs for their customers, ordered and approved by the PSC.

The AEP companies' programs include, for residential customers, subsidized sales of compact fluorescent light bulbs, home energy audits with recommendations for improvements and offers of rebates, and support for the state's Low-Income Home Energy Assistance Program, LIHEAP. To commercial and industrial customers, the companies offer rebates for more efficient lighting and heating and cooling.

In 2012, the programs saved 51 million kilowatt-hours, up from 22 million in 2011.

The AEP companies take in about $6.1 million a year in customer rates to support the programs, and propose to continue that for the coming year.

But they also seek an incentive.

A challenge in asking utilities to promote energy efficiency among their customers is that utilities make a return on investments that increase supply but they lose money on energy efficiency investments that decrease demand: not only do they get no return on the investments, but, by reducing demand, the programs also cut sales.

The companies propose to receive 5 percent of the pre-tax net benefits of the programs as their incentive, up to a total of 12 percent of program cost.

The incentive for 2012 would come to about $605,000, according to the filing.

The companies said in the filing that regulators in other jurisdictions have allowed their sister companies incentives for energy efficiency efforts and that, as a result, those companies have much larger energy efficiency programs, both in terms of spending and of kilowatt-hour savings achieved for participating customers.

An incentive, or lack of an incentive, will figure into the companies' future plans for expanding their energy efficiency programs, they said.

To follow the case, subscribe to case number 13-0462 on the Public Service Commission's website.