Utility rates rising, but so is energy efficiency

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1 Utility rates rising, but so is energy efficiency Peter 11:05 p.m. CST November 22, 2014 Xcel Energy, MidAmerican Energy want to raise rates, but energy-saving devices are cheaper Cathy LeDuc, co-owner of Lamps & Shades Lighting Gallery and certified lighting consultant, shows different LED bulb options in the Sioux Falls store on Thursday, Nov. 20, 2014.(Photo: Jay Pickthorn - Argus Leader) 25 CONNECT 25 TWEET 5 LINKEDINCOMMENT MORE The cost of lighting and heating your home is going up. Fortunately, you've never had more power to do something about it. Xcel Energy and MidAmerican Energy are both seeking permission from state regulators to increase the rates they charge Sioux Falls customers. Xcel Energy wants to raise its electricity rates by 8 percent, while MidAmerican is seeking an average 3.5 percent increase for natural gas customers.

2 They won't be the last rate hikes, as utilities work to maintain and upgrade aging infrastructure, respond to new environmental regulations, and react to other local and global pressures that are pushing up the cost of delivering energy. Meanwhile, though, the availability and affordability of energy saving products, from highefficiency light bulbs to solar panels, has been improving at a historic pace. While many items and investments have been slow to catch on in Sioux Falls, it's clear that energy conservation is becoming a better bargain for local homeowners. "There has never been a time as exciting as this to be in the lighting business with the rapid advancements in technology," says Jim Le Duc, president of Lamps and Shades Lighting Gallery. The retailer on Minnesota Avenue has seen strongly increasing interest among customers the past few years for light-emitting diodes, or LEDs, to replace incandescent and standard flourescent lighting. The bulbs use at least 75 percent less energy and last 25 times longer than incandescent lights. "The public has really picked up on LED," says Le Duc, who demonstrates the efficiency to customers with meters that compare electricity consumption. "The energy savings, that's the driving force," he says. Sioux Falls homebuilders who sell energy efficient homes say buyers' interest and awareness varies widely, but many recognize the value once it's explained to them. "We display our homes and educate them what it means in dollars and cents," says Nate Stencil of Stencil Homes. "When we get through our process we're seeing as high as 90 percent of the people end up being interested, really engaged or committed to building their home" to energy efficient standards. That was the story with Gerry and Ann Summa, who bought an Energy Star home from Stencil in southern Sioux Falls in August "Actually, we weren't even thinking energy efficiency when we started out," Ann Summa says, but "the more we investigated, the more interested we became." They ended up buying an Energy Star home designed to use up to 30 percent less energy than a typical new home, thanks to extras such as heat-blocking windows, spray foam insulation, and high-efficiency appliances. It's quiet, comfortable, and costs noticeably less to heat and cool. Lowe's Home Improvement spokesman Steve Salazar says customers nationally are increasingly receptive, especially as the economy improves, to pay more up front for appliances and other products they know will ultimatly save energy and money in the long run.

3 "Buying decisions are based on a number of different factors, but experience tells us if our associates quantify those benefits most customers will opt to buy a more energy efficient option," says Salazar. Oftentimes even replacing older appliances with an average product today results in energy savings, thanks to federal energy standards and improving technology. A typical refrigerator in 1972 cost about $132 a year to run, for example, while today it's around $102, according to the South Dakota Public Utilities Commission. The same is true in home construction, where building code changes are making energy efficient the new normal. A tipping point in Sioux Falls was in 2000, when the city adopted International Code Council building standards, according to Ron Bell, the city's building services chief building official. "There was a huge change in all the code requirements. One of the biggest challenges I ever had, especially with residential builders, was getting them accept the code does mandate certain R- values," the unit of thermal resistance in insulation, Bell says. "We spent months with the home builders on that." The building codes are revised every three years. "With every code change, the city is updating energy conservation requirements. The houses are becoming tighter and tighter," says home builder Paul Fick. Xcel Energy and MidAmerican Energy, as they propose rate increase, also offer rebates and other programs to help customers lower their energy bills. Xcel Energy introduced energy efficiency programs in South Dakota in Last year, the company worked with 82,595 business and residential customers to conserve six gigawatt hours of electricity. The company spent $786,991 achieving that, exceeding the $750,000 incentive offered to it by the South Dakota Public Utilities Commission. For residential customers, the programs include such things as energy efficient lighting and saver switches that cycle air conditioners on and off during periods of peak demand, when the price utilities pay for electricity to meet unexpectedly high use can spike. Similar programs have been in effect in Minnesota for two decades, according to Regional Vice President Laura McCarten. "We were able to piggyback on that and use the same people to provide the services in South Dakota. We don't have to build everything brand new," McCarten says. For the short amount of time Xcel has offered energy efficiency programs in South Dakota, participation "has been a little bit on the high side of average," compared to other states where Xcel offers them, says Karen Rhodes, the company's energy efficiency marketing manager.

4 If the South Dakota Public Utilities Commission accepts the utilities' proposed rate increases, the payback time on home energy conservation projects will look that much better, with investments like the Summas' Energy Star home paying even bigger dividends. Says Ann Summa: "The difference in the tightness of the house and the utility bills it has definitely turned out to be what they said it would be." REFRIGERATOR: A typical new refrigerator uses about half the energy of a typical 1990 refrigerator. EnergyStar.gov offers a refrigerator retirement calculator to determine whether it makes financial sense to replace an older one with a new energy efficient model. HEATING: Heating is the largest energy expense in most homes, accounting for up to half annual energy bill in colder regions. If your furnace or boiler is older than 20 years, odds are it's a good investment to replace it with a more efficient model. COOLING: Before upgrading to a higher efficiency air conditioner, the cheapest way to save energy is to lessen the need. Add insulation and window shades, use fans to better circulate cool air and replace heat-producing incandescent light bulbs and inefficient appliances. LIGHTING: Replacing 15 inefficient incandescent bulbs in your home with energy-saving bulbs could save you about $50 per year. WINDOWS: The average homeowner can expect savings between $126 and $465 per year from replacing single pane windows with energy efficient windows. INSULATION: Homeowners typically save up to $200 a year in heating and cooling costs by air sealing their homes and adding insulation. ELECTRONICS: Unplugging unused electronics can save you as much as 10 percent on your electricity bill. TREES: Shade from mature trees planted on the east, west and northwest sides of a house can cut summer air conditioning costs 25 percent. Firs and pines planted in the direction of prevailing winds can also block winter wind. Southern exposures should be left open to catch available light. Sources: American Council for an Energy Efficient Economy, Department of Energy, Energy Star, Minnesota Department of Natural Resources Home Energy Costs On the Rise Xcel Energy and MidAmerican Energy both have pending rate increase requests before the South Dakota Public Utilities Commission. Xcel is proposing to collect 8 percent more revenue from customers. A residential customer using 750 kwh per month would see their monthly bill increase by about $8.49. The company

5 says the increase is needed to cover increases in operation and maintenance costs, as well as investments in its nuclear fleet, transmission lines, and renewable energy. MidAmerican is asking for a 3.5 percent increase in what it collects from natural gas customers. It's the company first request to raise gas rates in a decade. Besides inflation and increased regulation, the company says the added revenue is needed to keep up with improvements and extensions of its system due to the area's rapidly growing economy. It's also replacing several miles of aging pipeline. For information on energy saving programs and rebates from the utilities: Xcel Energy: MidAmerican: