Evergy will go through the regulatory process to change customer rates this year
Kansas’ largest electric utility says inflation and plans to add more renewable energy are to blame for the ever-rising estimated cost of its infrastructure investments.
Evergy’s plan, which outlines investments in the grid and energy production, is more than $1 billion higher than the one it filed in 2021, which was $1 billion higher than its filing in 2020.
The new capital plan also estimates $1.2 billion more in spending compared to Evergy’s “sustainability transformation plan,” which critics already worried would overspend in order to benefit the utility’s shareholders.
But, Evergy says, it’s making progress bringing its customer rates in line with peer states.
“We are a big infrastructure business — can’t turn the ship quickly,” CEO David Campbell said in December.
Environmentalists, however, say Evergy could save money if it transitioned more quickly to renewable resources. While much of the cost increase represents newly planned renewable projects, a huge chunk of Evergy’s overall spending goes to existing coal plants.
“What’s really bothersome is that Evergy is spending almost as much money on maintaining its older, more expensive power plants as what it’s spending on brand new, clean generation,” Zack Pistora, a lobbyist for the Kansas chapter of the Sierra Club, said in an email.
Evergy, which serves 1.6 million customers in Kansas and Missouri was called in last month to testify before Kansas regulators about the “highly concerning” jump in the cost of its capital investment plan. Staff of the Kansas Corporation Commission were concerned the upward trend in expected spending “will undermine the goal of achieving regionally competitive rates and reliable electric service.”
Evergy, which formed from the merger of Wester Energy and Kansas City Power and Light, is expected to file a rate case with regulators this year. That’s when it can ask regulators’ approval to increase or lower rates. Utilities like Evergy are regulated monopolies that cannot raise customers’ bills to bring in more funds. But when they invest in infrastructure, they’re allowed a return on that investment, benefiting their shareholders.
Consumer advocates at the Citizens’ Utility Ratepayer Board expressed concern that there may be pressure to build up Evergy’s assets “and increase shareholder value.”
Campbell said while the growth of Evergy’s capital expenditures is higher now, it hasn’t always been that way.
“While … the total growth rate in our capital plan is still a little below average, we used to be even further below average,” Campbell said.
The company attributes some of the rise in cost to new renewable projects it has planned for 2026. There were no renewable energy projects planned in 2021, making the 2022-2026 timeframe costlier than 2021-2025.
The rest is because of additional plans for investment in renewable energy, transmission and distribution.
Campbell said the budgeting process is a dynamic one and plans can change. He noted Evergy’s decision to back away from plans to build 700 megawatts of solar power by the end of 2024.
“We had not finalized the contracting for some of the key elements, and the supply chain crisis hit, the price of panels went up,” he said.
Ty Gorman, Kansas campaign representative for the Sierra Club’s Beyond Coal Campaign, said in an email that the concern about increased costs because of supply chain issues was a fair one. But, he said, the market will likely correct and federal legislation meant to spur renewable energy development would help.
Gorman said Evergy is keeping expensive coal plants on the books to receive a return on their investment in them.
“It’s like when someone orders way more at a restaurant than they could possibly eat, but you’re stuck paying the bill,” he said.
KCC staff were also concerned that Evergy’s plan assumed it would own all of the renewable energy generators it adds in the coming years rather than purchasing the power from developer-built facilities. Evergy is allowed to recoup a return on investment when it builds projects itself.
But Evergy said it would go through a request-for-proposal process with each project to determine the best plan.
Evergy said there are also risks with developer-led projects. In 2021, Campbell said two developers walked away from projects with Evergy.
The December workshop was not intended for the KCC to take any action on Evergy’s plans. The company’s spokeswoman, Gina Penzig, said in an email that Evergy appreciated the opportunity to provide information on its plan.
“Our capital investment plan has been and is projected to remain lower than the majority of regional peers and is focused on maintaining a reliable electric grid and ensuring a responsible transition to cleaner energy sources,” Penzig said.
David Nickel, consumer council for CURB, said the capital plan allows stakeholders an early look at Evergy’s expenditures, but they won’t be able to assess what projects they think are necessary until Evergy files its rate case.
“The capital plan is just what it is – it’s a capital plan. Where the rubber meets the road really is the rate case that’s going to be filed…this year,” Nickel said.
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