BY: MEG CUNNINGHAM
Evergy confused and angered its Missouri customers in 2023 when it rolled out time-of-use rates that meant prices would run highest when people use the most electricity.
Missourians, especially those on fixed incomes, complained of high costs and having to choose between things like groceries and their medications or powering their homes during peak hours.
Now, Evergy Missouri West, which has a monopoly on service for much of the western part of Missouri outside of Kansas City, is heading back to its regulator to ask for more from the 340,000 users in the region. (Here’s how you can weigh in.)
Evergy wants the Public Service Commission to OK a 13.99% increase in electric rates, giving the company up to $104.5 million more in revenue a year. In 2023, the company reported $731 million in earnings.
“As people do we pick between: are we eating, or are we paying our power bill?” said Kelly Smith, who showed up to testify at a public hearing in St. Joseph on the proposed rate hike. “My bill is just shy of $300. I work all the time. I’m hardly ever home. … My thermostat is set to 75 degrees.”
The Public Service Commission held several hearings across Evergy’s coverage area in late July. Dozens of Missourians, including lawmakers, showed up to argue against the rate hike. They shared stories of $700 bills, finding every energy-efficient upgrade to their home they could and making tough choices about which bills to pay.
Just because the company asked for a rate increase doesn’t mean it’ll get what it asked for. The commission started an 11-month review in February. It will decide in December how much rates might go up starting Jan. 1.
Why is Evergy asking for a rate increase?
Evergy argues it needs the higher rates to recoup money it spent on two natural-gas plants and for a range of upgrades to withstand severe weather and surges of demand for electricity.
The upgrades in the grid have already been made, said Gina Penzig, a spokesperson for Evergy.
“We make the investments and the power grid, and then we go to the commission and ask to recover those investments,” Penzig said. “So we are asking for money that the company has already spent.”
The company is asking for funds to aid in its purchase of part of a natural-gas plant in Pleasant Hill to generate more electricity for the region. It’s also reupping its longtime request to make back some of the cost of transporting power from a natural-gas plant in Mississippi to Missouri, a request the state regulators have previously denied.
Evergy has conducted studies that show transmitting the energy from Mississippi to Missouri is the most cost-effective method of serving some customers. If they can’t recover those costs, Evergy may have to revisit the issue in the future to find another way to transmit that energy, Penzig said.
The rate hike request alarmed some Evergy customers, which drew the attention of lawmakers. They’d already been hearing complaints about the time-based plans mandated by the commission.
“They said that the average customer was supposed to have a rate decrease,” said Rep. Dean VanSchoiack, a Republican who represents parts of the state north of St. Joseph. “I’ve not met that average customer yet.”
He takes issue with how Evergy is passing along the costs of its upgrades to customers, who don’t have the choice of simply switching providers if they can’t keep up with the bill.
“From what I understand right now — 13.99% — it’s mostly to cover the expenses they did upgrading their poles and lines,” VanSchoiack said. “I was in business. You have to make money…but there are certain costs of doing business that you don’t get to expense right away.”
But because utility companies are monopolies, they aren’t faced with the same burdens of a typical business in a free market.
“Utilities are basically glorified construction companies,” said Geoff Marke, the chief economist at the Missouri Office of Public Counsel, a sort of ombudsman. “When they build assets, they make a return on it. So they have a perverse incentive to build as much as they can.”
Evergy says its rates lag its peers across the country. But the OPC said that lacks context.
When Evergy was formed in 2018 from the merger of Kansas City Power and Light Co. and Westar, regulators froze its rates for five years.
In 2018, the Missouri General Assembly passed a law that allowed utilities to access plant-in-service accounting, which spreads out the cost of investments over years. Those costs are typically passed on to the consumer.
“I’d say it’s much less ‘We didn’t ask for anything,’” said John Clizer, the senior counsel for the Office of Public Counsel, “and much more about ‘We delayed asking for a lot of things, but you are still going to pay for all of that.’ They may not have gotten the rate increases, but you’re also seeing all these other increases to certain charges.”
The Public Service Commission’s options
The Public Service Commission consists of five members and has the power to approve the rate increase as is, deny it or respond with a rate different than what Evergy asked for. The commissioners are appointed by the governor. Gov. Mike Parson has appointed all but one of the current members, who have a staff of over 200 at their disposal.
The commission is structured like its regulatory counterpart in Kansas, the Kansas Corporation Commission. The KCC has three members, also appointed by the state’s governor. They approved a rate increase in November for Evergy’s central Kansas customers, also to cover costs associated with power plant investments and new infrastructure.
The proposed rate increase comes as many Republicans in Jefferson City are looking to regulate the regulator. After frustration over the time-based plans, some lawmakers want to add two more people to the commission and require more varied professions. Some proposed legislation looks to require some members to have farming or utility backgrounds.
Kayla Hahn is the current chair of the commission. She was most recently Parson’s policy director. Three other members previously served in the Missouri General Assembly. The most recent addition to the commission is John Mitchell, who spent over three decades in various roles at Burns & McDonnell Engineering in Kansas City.
Renew Missouri, a group that advocates for the state to move toward cleaner energy sources, says the most recent appointment is breaking from the traditional model.
“Generally it’s been lawmakers and aides to the governor who are on there,” said James Owen, the group’s executive director. “I think it’s good to see different professions represented there.”
Some lawmakers, like VanSchoiack, want to see commissioners who aren’t necessarily politicians.
“They’re working too much for the power companies, not enough for the people,” VanSchoiack said.
Owen said the commission is “pro-utility.”
“They need to be confronted with the fact this is not just some line on a balance sheet,” Owen said. “It is actually real people who are struggling and suffering.”
VanShoiack isn’t confident that all of the legislature or Republican leadership sees the need to take another look at the structure of the commission.
“We need to be looking at things that really do truly help people,” VanShoiack said. “I think we’d be better off if we did try to focus more on some of these issues and less on the political issues.”
This article first appeared on Beacon: Missouri and is republished here under a Creative Commons license.
