Evergy, regulators clash over costs of Kansas energy efficiency program

Evergy has provided energy efficiency programs in Missouri for years. A proposal could bring similar ones to Kansas.

By: - August 23, 2022 1:34 pm

Evergy CEO David Campbell speaks at the July 23, 2021, dedication of Evergy plaza in downtown Topeka. Evergy has proposed energy efficiency programs to Kansas regulators. (Sherman Smith/Kansas Reflector)

Evergy could soon receive approval for more than $96 million in energy efficiency programs in Kansas meant to lower carbon emissions — and customers’ bills. 

But the proposal is in a precarious position. 

“I want to be excited, but I also know there’s a big a piece missing still, and it could easily all fall apart,” said Ashok Gupta, a senior energy economist for the Natural Resources Defense Council, who advised on the programs. 

On Tuesday, Evergy filed with regulators at the Kansas Corporation Commission to delay proceedings on the issue while the company negotiates a financial deal to make the programs possible. 

“Starting all over again in a new docket a year or more from now would be wasteful and could cause Kansas to continue to lose out on what has been proven to be the clear benefits of (demand-side management),” the filing says. 

Evergy serves 1.6 million customers in Kansas and Missouri, covering the Kansas City metro area and much of eastern Kansas and western Missouri. For years, the utility’s Missouri customers have benefited from programs meant to increase energy efficiency, including allowing customers to finance upgrades, such as new windows, through a fee on their utility bills. 

But Kansas has almost no energy efficiency programs. The state ranks 47th out of the 50 states and Washington, D.C., for energy efficiency policies and programs, according to the American Council for an Energy-Efficient Economy.

Evergy, Kansas Corporation Commission staff and environmental and anti-poverty activists reached an agreement on a set of programs for Kansas earlier this month. But the KCC staff says it can’t support the plan to allow Evergy to recoup the costs of the programs from ratepayers. In short, staff says Evergy would get to keep too much money. 

Evergy said in a statement that it and most stakeholders agreed on the programs.

“We still have more work to do with parties to get a final agreement,” said spokeswoman Gina Penzig. “Evergy is eager to offer programs … that would provide Kansas residential and business customers with net bill savings, enhanced assistance for low-income and rural customers and new community benefits, like job creation, energy education and agency partnerships.”

Energy efficiency programs

Advocates often refer to energy efficiency programs as the “lowest-cost resource,” meaning helping customers conserve energy is cheaper in the long run than building new coal plants or wind turbines. 

Evergy estimates its Missouri programs have saved energy equivalent to powering 89,000 homes and lowered emissions as though it took 150,000 cars off the road.

The Kansas proposal is estimated to save enough energy to power 39,000 homes. The lowered emissions equate to removing 45,000 cars from the road. 

The proposal has won support from the Citizens’ Utility Ratepayer Board, which represents residential and small business utility customers. Dave Nickel, consumer counsel for CURB, said even customers who don’t directly participate in the programs will benefit.

“The benefit to customers in general, whether they’re part of the program or they’re not participants in the program, is to lower the overall cost of energy over time,” Nickel said.

Lightening the electrical load is an important step for Evergy to achieve net-zero carbon emissions. The utility plans to do so by 2045.

But utilities have to design their operations to meet demand during summer and winter peaks. That means having power generators that can be called upon to create energy for only a few days or weeks a year. 

Gupta frequently compares it to having a delivery service that has to have a truck to deliver one package once a year. 

“The whole system is designed for peaks, and fixing people’s homes is so much cheaper than to keep building more and more and more, and keep buying more and more and more trucks that you hardly ever use,” Gupta said earlier this year.

Recouping costs 

When utilities invest in energy efficiency programs, it means they will receive less money from customers’ bills. Almost universally, Gupta said, utilities are allowed to charge customers for their lost revenue. In the regulatory proceedings, it’s called the “earnings opportunity.”

That’s what regulators object to. 

The earnings opportunity “represents benefits retained by Evergy for shareholders, which are not enjoyed by customers, and we cannot support (earnings opportunity) levels this high,” the KCC staff’s filing says. 

Evergy argued in its Tuesday filing that the analyses done during the regulatory proceedings show substantial benefits of the program would flow to Kansas customers. 

Evergy said KCC staff’s proposed earnings opportunity was “substantially out of sync with what can reasonably be expected to incent a utility to voluntarily take action detrimental to its business — spending money to sell less of its product.” 

“Staff’s position was viewed as inconsistent with the policy goals of (the Kansas Energy Efficiency Investment Act ) as it would not promote demand-side management in Kansas…it would kill it,” the filing says. 

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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.

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