Aggressive spending or necessary investments? Kansas Senate bill would cap Evergy rate hikes

The bill would prohibit the Kansas Corporation Commission from approving rate hikes greater than 1% per year.

By: - February 18, 2022 10:00 am

Evergy headquarters in downtown Topeka. A Senate bill would prohibit state regulators from approving rate increases for Evergy greater than 1% per year for the next 10 years. (Sherman Smith/Kansas Reflector)

KANSAS CITY, Mo. — Kansans can’t keep tolerating electric rate hikes from the state’s dominant monopoly utility, Evergy, say proponents of a bill to cap increases.

Energy in Kansas used to be competitive compared to the region, they said, but costs are now soaring past peer states. According to the Energy Information Administration, average electricity prices per kilowatt hour in Kansas are higher than the four states it borders and most of the Midwest

The goal is to address “aggressive and … excessive spending” by utilities, said Paul Snider, representing Kansas Industrial Consumers Group and Kansans for Lower Electric Rates.

“How do you explain that to your constituents — that everybody pays something unless you’re a utility (and) you’re made whole through all these economic challenges?” Snider said.

Senate Bill 349, heard Tuesday and Wednesday by the Senate Utilities Committee, would cap rate increases by 1% per year for 10 years. But it’s only meant to target Evergy, a publicly traded electric utility that serves the Kansas City metro and much of eastern Kansas. Snider said he would support an amendment to make it clear the bill doesn’t target Kansas’ smaller electric providers.

Monopoly electric companies must go through state regulatory boards to raise rates, generally to pay for investments in new energy and grid infrastructure. Proponents of the bill — including Snider’s group, the Kansas Chamber, Americans for Prosperity and oil and gas interests — say it doesn’t prevent utilities from doing that. It merely delays the recouping of those costs.

Evergy says the bill would create the only law like it in the nation, actually increase rates in the long run and unfairly target the state’s largest provider.

“There is no rate cap like this articulated in any statute in the United States — not currently, not, to our research, ever,” said Chuck Caisley, a senior vice president at Evergy.

Caisley said Evergy would either have to go before the Kansas Corporation Commission several times a year to prove its investments in infrastructure are essential for reliability to get around the cap, stop making those investments in reliability, or defer the costs of those projects.

“What’s deferring? It’s running our house on a credit card,” Caisley said, adding that businesses already in Kansas and those looking to bring jobs to the state would be able to see the costs that have been deferred and estimate the rate impact.

“It’ll be a massive impact under this bill,” Caisley said. “Will they stay to pick up that tab? Will they come if they know that’s out there? I’m not so sure that they will, so it’s mortgaging our future.”

Proponents of the bill said Kansas’ energy burden is getting out of control. Elizabeth Patton, a lobbyist for the Koch-funded Americans for Prosperity, said about 60,000 Kansans have close to 30% of their household income eaten up by energy bill.

“If we continue to raise electricity rates and allow them to raise without consideration of the impact that has on families and businesses, our state will pay the price,” she said. 

Snider said the bill was written to avoid capping costs Evergy doesn’t control — like the cost of purchasing energy or the property taxes it pays local governments. In its Kansas territories outside of the Kansas City metro, Evergy has proposed to pass on $152.3 million in costs from last winter’s deep freeze that drove the price of natural gas up by 200 times. Kansas City-area Evergy customers are expected to see slight savings because Evergy generated more power than its customers needed in that area during the storm. 

Even groups that typically advocate for lower utility rates cautioned the committee against the bill, though some offered their testimony as “neutral” conferees.

The Citizens’ Utility Ratepayers Board, which represents residents and small commercial utility customers in regulatory proceedings, cautioned committee members the bill could cause rate shock to customers when the cap expires and Evergy recoups any investments it has made.

CURB’s executive director, David Nickel, said the bill could cause intergenerational inequity.

“In other words, some consumers that caused those cost increases will not bear those costs fully, and others that did not cause that increase will have to bear those costs,” Nickel said. “That’s inequity.”

And Kansas’ leading environmental group said the legislation does nothing to keep rates down in the long run.

“There’s no clear policy pathway to what we think could help keep electric rates low in the future,” said Zack Pistora, a lobbyist for the Kansas chapter of the Sierra Club, “and that’s a clean energy future.”

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Allison Kite
Allison Kite

Allison Kite is a data reporter for The Missouri Independent and Kansas Reflector, with a focus on the environment and agriculture. A graduate of the University of Kansas, she’s covered state government in both Topeka and Jefferson City, and most recently was City Hall reporter for The Kansas City Star.