Evergy's Lawrence Energy Center, a coal-fired plant, was supposed to retire this year. The utility is keeping it around for several more years to deal with demand for energy. It requested to increase rates in Kansas. (Jill Hummels/Kansas Reflector)
Evergy’s request that Kansas customers pay another $218 million each year is a symptom of a system built without efficiency, an environmental advocate says.
And until Kansas regulators allow the investor-owned utility to implement its proposed suite of programs designed to bring down customers’ usage, Ashok Gupta, an economist for the Natural Resources Defense Council, says costs will keep going up.
“The root cause of high costs is that the system sits idle 50% or more of the time in order to serve the really, really hot days and really, really cold days,” Gupta said.
Evergy, which serves 1.6 million customers in Kansas and Missouri, formed from the merger of Westar and Kansas City Power & Light in 2018. In April, for the first time after a five-year moratorium, it filed a request with the Kansas Corporation Commission to increase its rates for Kansas customers. Testimony from consumer, environmental and business advocates is due at the end of August. A decision is likely to come by the end of the year.
For the average customer in the Kansas City area, the requested rate increase would mean another $3.47 each month. But for the rest of the company’s Kansas territory — which covers most of the eastern half of the state, including Topeka, Wichita and Salina — monthly bills would rise by $14.24. Regulators don’t have to grant all of what Evergy asked for.
Evergy’s filings say most of the requested increase is to pay for upgrades it has made to the system, including replacing power lines and adding technology that can more quickly isolate the cause of a power outage to reduce its reach. Another chunk would help the company recoup the costs from its aging coal plants so it can retire them. Regulated utilities like Evergy can adjust rates to recoup the costs of adding power plants or distribution infrastructure.
But Gupta said lowering demand by making Kansas homes more energy efficient would save money in the long run by keeping Evergy from having to build more and more. Kansas is ranked 49th out of the 50 states and Washington, D.C., for energy efficiency by the American Council for an Energy-Efficient Economy. It fell from 47th last year.
“As winters get colder and summers get hotter, the costs are only going to go up,” Gupta said.
Evergy requested permission from the Kansas Corporation Commission to institute several energy efficiency programs, such as incentives for energy-efficient appliances and weatherization. But staff of the KCC hit the brakes on the programs despite buy-in from Evergy, consumer advocates and environmentalists. They said the program was too expensive.
A year later, the effort is at a standstill. The commission has its choice of Evergy’s original proposal or a pared-down version supported by staff.
A spokesman for the commission said there is no timeline for when commissioners must decide on a program.
In the meantime, Evergy has delayed coal plant closures and proposed new natural gas plants to meet demand, something environmental activists have decried.
Courtney Lewis, a spokeswoman for Evergy, said the company’s request for energy efficiency programs is still active and, if approved, would be considered in future plan updates. She said it’s a more cost-effective way to meet customers’ needs.
Evergy could propose another rate hike as soon as next year to meet the demand of the Panasonic plant planned in De Soto. The plant, which will produce batteries for electric vehicles, requires an amount of energy Evergy likened to a small city.
“We’re asking low-income residential customers to increase their bills by $70 a year,” said Ty Gorman, Kansas campaign representative for the Sierra Club’s Beyond Coal Campaign. “And, at the same time, filing a plan that doubles down on expensive coal and gas.”
Chuck Caisley, of Evergy, told a crowd in Wichita that nobody likes to see rates rise.
“In a time of significant inflation across the economy, an increase in electrical rates isn’t something that anybody wants, and, frankly, it’s not something that Evergy as a company wants to do,” Caisley said.
Current rate increase
Evergy’s proposed rate hike would be the first since 2017. In a news release announcing the rate case filing, the company pointed out that other utilities’ rates in the region have climbed, on average, 13%. Inflation has driven the costs of other goods up 20%.
But Kansas’ electric rates still remain higher than surrounding states, according to the Energy Information Administration.
And Evergy’s proposal to raise rates by almost 10% across its Kansas territory — aside from the Kansas City area — was met with frustration at a public meeting in Wichita.
“This is going to hurt us economically when it comes to being competitive with other areas of the state,” said Wichita Mayor Brandon Whipple. “… It’s going to hurt us when it comes to attracting jobs, and more importantly, it’s going to hurt our citizens.”
Whipple started to say the rate hike would hurt elderly residents on fixed incomes when he was cut off by the moderator of the meeting.
“I’m getting to my question,” Whipple said.
The moderator, a member of the KCC staff, replied: “OK, please do.”
Whipple, frustrated: “Excuse me. Excuse me. Thank you.”
“No. No, no no,” the moderator replied. “I want to give all of your constituents the opportunity to ask a question.”
Whipple questioned why customers should pay for Evergy’s executive benefits.
Dozens of customers expressed outrage at the proposed hike.
“How are we going to fix this?” asked Shannon Thomas. “Because I’m a poverty-level mom. $15 a month is going to hurt me.”
Lewis, the Evergy spokeswoman, said the utility works to keep costs low because its staff knows rate hikes can be difficult. She said the utility has a team that works with customers who need help paying their bills. The company provides face-to-face assistance and information to more than 14,000 customers each year.
Dave Nickel, consumer counsel for the Citizens’ Utility Ratepayer Board, said the agency, which represents residential and small business utility customers, is still developing its comments on Evergy’s request.
But he said CURB will likely go after executive salaries, any unnecessary or exorbitant spending by Evergy on infrastructure, and the company’s requested rate of return for investments.
Nickel said CURB was supporting the “time-of-use pricing” included in the rate case. Customers can opt into plans where energy is more expensive during times of peak demand, such as 4 p.m. on a hot summer day, and cheaper during non-peak times.
Evergy is in the process of rolling out the pricing scheme in Missouri under an order from state regulators to considerable blowback. But in Kansas, customers can opt in voluntarily.
Nickel, like Gupta, said implementing energy efficiency programs could help control Evergy’s prices in the long-run. The state has a policy saying utilities and regulators should work together on energy efficiency.
But he said for “almost 10 years, we haven’t gotten squat.”
This article has been updated to reflect Missouri regulators’ role in requiring “time-of-use” pricing in that state.
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