KANSAS CITY, Mo. — Kansans cannot continue to tolerate electric rate hikes from the state’s dominant monopoly, Evergy, say supporters of a bill to cap the increases.
Energy in Kansas used to be competitive with the region, they said, but costs now exceed peer states. According to Energy Information Administrationaverage electricity prices per kilowatt-hour in Kansas are higher than the four states it borders and most of the Midwest
The goal is to combat “aggressive and… overspending” by utilities, said Paul Snider, representing the Kansas Industrial Consumers Group and Kansans for Lower Electricity Rates.
“How do you explain this to your constituents – that everybody pays something unless you’re a public service (and) get cured of all these economic challenges?” Snider said.
Senate Bill 349, heard Tuesday and Wednesday by the Senate Public Utilities Committee, would cap rate increases at 1% per year for 10 years. But it’s only intended to target Evergy, a publicly traded electric utility that serves metro Kansas City and much of eastern Kansas. Snider said he would support an amendment to clarify that the bill does not target Kansas’ small electricity providers.
Monopoly power companies must go through state regulators to raise tariffs, usually to pay for investments in new power and grid infrastructure. Supporters of the bill — including Snider’s group, the Kansas House, Americans for Prosperity and oil and gas interests — say it doesn’t stop utilities from doing so. This only delays the recovery of these costs.
Evergy says the bill would create the only law like it in the country, effectively raise long-term rates, and unfairly target the state’s largest supplier.
“There is no price cap like this set forth in any law in the United States — not currently, not, in our research, ever,” said Chuck Caisley, senior vice president at Evergy.
Caisley said Evergy would either have to appear before the Kansas Corporation Commission several times a year to prove that its infrastructure investments are critical to reliability to get around the cap, stop making those reliability investments, or defer the costs of these projects.
“What is deferred? He runs our house with a credit card,” Caisley said, adding that businesses already in Kansas and those looking to create jobs in the state could see the costs that have been deferred and estimate the impact on rates. .
“It will be a huge impact under this bill,” Caisley said. “Are they going to stay to pay for this tab? Will they come if they know it’s there? I’m not sure they will, so it mortgages our future.
Proponents of the bill said Kansas’ energy load was spiraling out of control. Elizabeth Patton, lobbyist for Koch-funded Americans for Prosperity, said about 60,000 Kansans had almost 30% of their household income gobbled up by energy bills.
“If we continue to raise electricity rates and allow them to rise without considering the impact it has on families and businesses, our state will pay the price,” she said.
Snider said the bill was drafted to avoid capping costs that Evergy does not control, such as the cost of purchasing energy or the property taxes it pays to local governments. In its Kansas territories outside of Metro Kansas City, Evergy offered to transfer $152.3 million of the costs of last winter’s freeze that sent natural gas prices up 200 times. Evergy customers in the Kansas City area are expected to experience slight savings as Evergy generated more electricity than its customers needed in that area during the storm.
Even groups that generally advocate lower utility rates cautioned the committee against the bill, though some offered their testimony as “neutral” participants.
The Citizens’ Utility Ratepayers Board, which represents residents and small commercial utility customers in regulatory proceedings, warned committee members that the bill could cause a price shock for customers when the cap expires and Evergy recovers all the investments it has made.
CURB executive director David Nickel said the bill could cause intergenerational inequality.
“In other words, some consumers who caused these cost increases will not fully bear these costs, and others who did not cause this increase will have to bear these costs,” Nickel said. “It is iniquity.”
And Kansas’s leading environmental group said the legislation did nothing to keep rates low over the long term.
“There is no clear political path to what we think can help keep electricity rates low in the future,” said Zack Pistora, a lobbyist for the Kansas chapter of the Sierra Club, “and it’s a clean energy future.”