Heavy power users seek relief for electric rates

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The lawyer for a coalition of heavy power users in Kansas is asking lawmakers to take steps to ensure the state has regionally competitive electric rates.

Jim Zakoura, lawyer for the Kansas Industrial Consumers Group, made a case about the need for lower rates before the Senate Utilities Committee Thursday.

“We have the highest rates in the region. There’s no question about that,” said Zakoura, who represents a group of power users that includes Cargill, Spirit AeroSystems and Goodyear Tire.

“The Legislature has helped us every way that they can,” he said. “We need more help.”

The latest data from the Energy Information Administration shows that Kansans on average were paying more for electricity than six other nearby states.

Kansans were paying an average price of 9.76 cents per kilowatt hour for the first month of 2021, about 8% less than it was a couple of years ago.

It was higher than Missouri (8.32 cents), Iowa (8.04 cents), Oklahoma (7.11 cents),  Nebraska (8.37 cents), Colorado (10.03 cents) and Arkansas (7.87 cents).

A spokesman for Evergy said the arguments about high electric rates in Kansas are old and untrue. He said the rates are actually declining.

Zakoura wants the Legislature to nudge state utility regulators to be more vigilant about guarding against rising electric rates in Kansas.

He said the system is “broken” because utility companies “make money by spending money.”

He said Evergy has been increasing capital spending over the years, noting that its five-year capital plan has risen from $7.6 billion in 2018 to $9.2 billion in 2021.

He blamed Kansas’ electric rates on capital spending by Evergy, which he said totals $1 billion more than depreciation each year.

“I don’t think anyone can say we’re being miserly in terms of capital expenditures,” he said.

He’s was particularly concerned about the company’s sustainability transformation plan, a $9 billion roadmap for modernizing the utility’s grid, investing in renewable energy sources and cutting costs.

“There is no question that spending money is good for shareholder return,” Zakoura said.

“There is a question, however, whether spending that amount of money is good for retail electric rates,” he said.

Zakoura said he wants the Legislature to remind state utility regulators that there is a state mandate for regionally competitive rates.

He said the KCC could set up a framework that would require anyone seeking action from the agency to explain how it would affect electric rates.

He said the KCC also can question whether the investment is needed immediately if it’s had a negative affect on electric rates.

“Can it be paced out?” he asked.

Chuck Caisley, chief customer officer for Evergy, said Zakoura was recycling arguments he’s previously made to the Legislature on various issues, including calls for a rate study approved by the Legislature.

“Just because you repeat something over and over, does not make it true,” Caisley said in a statement after the meeting.

“Today KIC once again repeated its greatest hits — half truths, carefully selected statistics and exaggerations,” he said.

Caisley said Evergy’s base rates have been frozen for five years and overall rates have gone down since Westar and Kansas City Power & Light merged.

He said Kansas electric rates experienced “one of the largest decreases” in the United States since 2018, going down 4.3%, while rates in surrounding Arkansas, Texas, Colorado, Nebraska and Iowa have increased.

Evergy cited federal data that showed the Kansas electric rates fell from 10.6 cents per killwowatt hour in 2017 to 10.26 in 2019. It was 9.76 cents in January.

Similarly, the company cited federal data that shows national rates increased 0.6% over the same time frame, rising from 10.48 cents per kilowatt hour in 2017 to 10.54 cents in 2019.

The Legislature recently funded a comprehensive rate study and another was undertaken by the Kansas Corporation Commission.

The KCC study blamed the state’s high electric rates on capital investments driven by environmental regulations, more coal-powered plants to meet consumer demand and construction of wind-powered facilities.

The capital investments, combined with declining demand for electricity, played a key role in about $1 billion in rate increases from 2007 to 2017, according to the KCC study.

The study showed an uptick in rates starting in about 2007 when residential customers paid about 8 cents per kilowatt hour.

By 2017, the residential rates had risen to almost 14 cents. Similarly, commercial users went from about 7 cents an hour in 2007 to a little more than 10 cents in 2017.