Kansas regulators order Evergy to explain ‘highly concerning’ jump in planned capital spending

Evergy can recoup capital costs from ratepayers, but not without approval from state regulators

By: - September 21, 2022 3:24 pm
Evergy building in downtown Topeka

Kansas regulators want Evergy to explain a more than $1 billion increase in its capital plan, calling the spike "highly concerning." (Sherman Smith/Kansas Reflector)

Kansas’ largest electric utility is being asked to explain a more than $1 billion jump in the costs of its upcoming investments, expenses that could eventually be passed onto customers through their utility bills.

Evergy filed an updated capital plan with regulators in February revealing the increase in costs compared to last year’s filing, which itself was a $1 billion jump over 2020. Regulators and consumer and environmental advocates responded with concern about Evergy’s planning.

“That’s a huge increase,” said David Nickel of the Citizens’ Utility Ratepayer Board. “And I think the commission is rightfully alarmed by the amount of the increases and I think they want some transparency around that issue.”

Evergy, which serves 1.6 million customers in Kansas and Missouri, filed a “sustainability transformation plan” last year at the urging of activist investors who now hold several seats on the publicly owned utility’s board.

According to an order from the Kansas Corporation Commission, Evergy’s updated capital plan represented a 22% jump in costs over the sustainability transformation plan, which some consumer advocates already worried was driven by investor interests.

In a report filed this summer, Kansas Corporation Commission staff called Evergy’s projections “highly concerning.”

“Evergy’s propensity over the last three years has been to increase its capital budgets higher and higher with every iteration,” Kansas Corporation Commission staff said in the filing. “If this continues, we believe it will undermine the goal of achieving regionally competitive rates and reliable electric service.”

The agency’s staff recommended the commissioners order Evergy to hold a workshop to explain the rising costs and file financial modeling to shed light on how the utility expects its investments to affect ratepayers.

Evergy declined an interview request but said affordable electricity and competitive rates are among its top priorities.

“Our capital investment plan is low compared to our regional peers and is laser focused on maintaining a reliable electrical grid and ensuring a responsible transition to cleaner and renewable energy sources,” spokeswoman Gina Penzig said in an email. “A workshop with the commission is an excellent opportunity to provide additional information regarding the need for our planned investments and to describe how they will benefit our customers and Kansas.”

According to its filing, Evergy expects the $1.2 billion jump in costs to increase rates by 1.1%.

Ty Gorman, Kansas representative for the Sierra Club’s Beyond Coal Campaign, said it was good to see the commission apply scrutiny to Evergy’s filing.

“This is, I’d say, the most significant pushback I’ve seen from the KCC to Evergy’s inadequate planning,” Gorman said.

Public Citizen, a consumer advocacy nonprofit, and the Communications Workers of America filed a complaint last year with the Federal Energy Regulatory Commission urging Evergy to disclose more information about its relationships with two hedge funds — Bluescape Energy Partners and Elliott Management Corp. — because of concerns they were exerting pressure on Evergy.

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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.