June 19, 2021
Lawrence, US 91 F
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Advocacy groups push for transparency in Evergy’s $8.9 billion ‘sustainability’ plan

KANSAS CITY, Mo. — Environmental and consumer groups are raising alarms about what they claim is limited transparency as Kansas regulators review Evergy’s plan to spend more than $8.9 billion on the utility provider’s infrastructure across the state.

“The (plan) represents the direction of the energy future that our monopoly utility is saying we should go, and the people who that’s going to affect should have a say in that process,” said Ty Gorman, Kansas representative for Sierra Club’s Beyond Coal Campaign.

The Kansas Corporation Commission is reviewing Evergy’s “sustainability transformation plan,” which it announced last year after Elliott Management Corporation, a major Evergy shareholder, told the utility company it should either develop a plan to invest in its infrastructure or sell.

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The plan, which Evergy says will help speed its transition to renewable energy and improve grid reliability after widespread outages during a severe cold snap this winter, doesn’t need KCC approval. The commission will review any spending Evergy proposes for its infrastructure when it reviews the rates the utility proposes to charge customers. Evergy, which formed from the merger of Kansas City Power & Light and Westar, provides power to about 1.6 million customers in Kansas and Missouri.

But a third-party consultant’s analysis that helped form the plan — and some information about the plan itself — aren’t publicly available. Evergy has marked them confidential through the KCC review process, claiming they contain sensitive information and plans that are still evolving. It says the KCC case gives environmental and customer groups a window into its planning, but shouldn’t require as much disclosure as a normal KCC case.

And while the name indicates Evergy’s plan is about sustainability, only a sliver of the spending is dedicated to generating new renewable energy. Consumer and environmental groups worry the plan, developed under pressure by Elliott, is meant to boost shareholder profits, not customer benefits.

“In the STP docket, we are sharing potential business decisions and considerations that have not been made,” said Gina Penzig, the company’s spokeswoman. “The docket includes material information that under Securities Exchange Commission guidelines is considered material and not appropriate for a publicly traded company to openly share.”

And while the KCC review process is nearing an end — comments on the STP were due last week — the commission has yet to rule on two pending motions attempting to force Evergy to be more transparent.

In an email, KCC’s legislative liaison, Jake Fisher, said the commission has not released a timeframe for ruling on those motions.

Origins of the plan

Evergy emerged from the merger of Westar and Kansas City Power & Light in 2018. The combined company is owned by investors and publicly traded on the New York Stock Exchange. 

Last year, Elliott pressured the company to spend more on infrastructure or sell. The company explored a sale, but instead decided to remain a standalone company. Earlier this year, Elliott gained two seats on Evergy’s board

In developing its plan, Evergy underwent an intensive 12-week analysis by Boston Consulting Group. Out of that came the sustainability transformation plan. Evergy’s website about the plan says it is expected to “drive increased value and benefits for all of the company’s stakeholders, including Evergy’s shareholders, customers, employees and the communities it serves.”

Evergy president and CEO Terry Bassham says the plan focuses on “decarbonization and grid modernization.” 

“The result is greener, more reliable and affordable energy for our customers, and enhanced earnings growth and value creation for Evergy’s shareholders,” Bassham said.

But Gorman said the plan was simply an attempt to “greenwash” for Evergy’s investors. 

The investments Evergy plans to make — primarily in transmission and distribution projects — don’t indicate a much faster transition to renewable energy or the closure of any coal power plants, Gorman said. 

“Nothing I’ve seen from this plan indicates that it’s sustainable or transformative,” Gorman said. 

Evergy says in the STP that those investments will provide better “access to renewable energy” by making the systems to transmit it more reliable. The plan also says the company could retire as much as 500 megawatts of coal generation in 2024 and develop or purchase another combined 900 megawatts of renewables by then. 

In all, it proposes spending $675 million on generating new renewable energy, $1.58 billion on generating other forms of energy, $5.93 billion on transmission and distribution facilities, and $723 million on general facility needs. 

The plan doesn’t spell out what those renewable energy investments will be.

Pushing for transparency

Sierra Club along with the Kansas Industrial Consumers Group, the Climate and Energy Project and the Citizens’ Utility Ratepayer Board have filed two motions in an attempt to allow more of Evergy’s plans into the public domain.

In November, they filed a motion to “enhance transparency,” asking KCC to mandate a number of things, including: 

  • Make all STP workshops open to the public 
  • Limit the use of confidential designations
  • Require that Evergy release a public version of the BCG report
  • Require that Evergy release system planning inputs, outcomes and assumptions around cost and value opportunities from owned vs. PPA efficiency, distributed generation, renewable all-source RFPs, storage, capacity and gas contracts.
  • Allow customers to participate in meetings and submit public comment 
  • Install technology to stream webinars and make transcripts available 

And in January, they filed a motion asking KCC to remove Evergy’s confidential designations. 

“Intervenors” — what the KCC calls interested third parties in its cases — can see Evergy’s plans and comment on them so long as they sign a nondisclosure agreement. Representatives for Sierra Club, KIC, the Climate and Energy Project and CURB have all signed those agreements and filed public comments.

But because some of the materials they commented on weren’t public, neither were the comments. Sierra Club filed its comments on the STP last week, including more than 14 full pages that were redacted.

The environmental advocacy group also included dozens of pages of public comments “written by stakeholders who did not find a way to participate in the STP process through other means.”

Evergy stressed in its motion that the STP is not a finalized plan. The KCC investigation, it says, allows customer and environment groups to see Evergy’s plans before they’re finalized.

“As a result, it has been necessary for Evergy to designate more materials as confidential than it would in a standard general rate case proceeding where the review is occurring after decisions have been implemented and investments have been made and Evergy is seeking cost recovery,” the company wrote. 

It added the groups’ tone “suggesting some sort of malfeasance on Evergy’s part for designating material as confidential is completely unwarranted.”

Evergy says some of the materials’ the groups want revealed need to remain confidential because, in some cases, not even Evergy’s board has approved them.

As for the consultant report, Evergy says it contains “material, non-public financial information that is commercially sensitive.” It says it also discuses potential “job eliminations/consolidations and plant closures well in advance of when they might be formally approved.”

“Public disclosure would affect Evergy’s ability to raise capital and could lead to a loss of skilled personnel in advance of any final decision to eliminate a position or close a plant,” the filing says.

Grading the plan

Sierra Club took several major issues with the STP, including its redacted comments about the underlying BCG analysis. 

Primarily, it said Evergy and KCC didn’t do enough to engage stakeholders, the purported purpose of the STP process. 

It also said the company should do more to invest in programs that bring cost savings to low-income customers, especially those hit hard by the COVID-19 pandemic. And it said the utility should invest more directly in projects that would make the company more sustainable and “place less emphasis on costly grid investments that may not benefit customers.”

“Evergy’s current version of the STP is based on an apparent directive to increase short-term profit by investing heavily in grid equipment replacement,” Sierra Club wrote. 

The group said Kansans in Evergy’s coverage area are suffering after enduring a year-long pandemic and economic fallout. Evergy should, according to Sierra Club, find ways to “lower bills for low-income customers, increase outreach, and assist customers to connect them with resources for energy efficiency, financing, bill payment, and erasure of existing utility debts that vulnerable people cannot pay.”

“Over the course of the COVID-19 health and economic crisis,” the Sierra Club wrote, “Evergy has involuntarily disconnected thousands of Kansans due to their inability to pay utility costs. A five-year plan centering sustainability or customers should focus on meeting basic needs for low-income families.”

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AARP Kansas worried the massive new spending in Evergy’s STP would drive up utility bills. It discouraged even some of the seemingly green initiatives it feared would drive up bills.

“The Kansas Corporation Commission … should be mindful that many Kansans struggle to pay their bills,” the group wrote. “Many AARP members must live on low or fixed incomes and are often faced with tough choices between paying for food, medicine and other monthly necessities.”

In its comments, CURB, which represents residential and small commercial customers, raised concerns the STP was designed to maximize Evergy’s shareholder earnings, not customer benefits. Evergy can’t raise customer rates until 2024 under a rate increase moratorium it agreed to as part of the Westar-KCPS merger. That’s the same year the STP ends.

Based on that, CURB claims the plan is designed to maximize shareholder benefit by cutting costs in the next few years and then hiking rates to cover capital projects when the moratorium ends.

“Given the fact that a disgruntled shareholder prompted the STP, CURB’s primary concern is to ensure that the STP does not result in higher costs to ratepayers or deterioration of utility service in an effort to increase shareholder earnings,” the group wrote.

Evergy’s comments in response are due April 30, and KCC will host a workshop May 12 to present the STP again after incorporating feedback from previous meetings and intervenor comments.

Kansas Reflector is part of States Newsroom, a network of news outlets supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

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