Westar-KCP&L merger already producing benefits
for Kansas customers, communities

Rate study: Kansas rates more competitive as merger efficiencies realized

KANSAS CITY, Mo., Jan. 14, 2019 – When Great Plains Energy (the parent company of KCP&L) and Westar Energy merged in June 2018 to form Evergy, the new company promised multiple benefits to customers. As the company enters the first full calendar year combined, Kansas customers have already seen significant benefits from the merger.

Customer credits: In December of 2018, Westar’s customers began receiving credits on their electric bill. These credits were the result of merger efficiencies and the reduction in federal income tax rates. KCP&L’s Kansas customers are scheduled to receive credits on their bills in the weeks ahead. The company anticipates future bill credits as additional merger savings are achieved.

Electric rates reduced: KCP&L and Westar both completed rate reviews in 2018. As a result of ongoing merger savings and the reduction in federal income taxes, the base price of electricity was reduced for all KCP&L and Westar customers. Westar prices decreased about $50 million and KCP&L $4 million.

Rate increase moratorium: Lower base rates enacted in 2018 will remain stable, as the company has committed to no base rate changes for five years (until December 2023).

Increased community investment: Both KCP&L and Westar have well-established histories of community involvement and charitable giving, which they pledged to maintain. Since the merger was completed, in addition to maintaining the companies’ historic levels of charitable giving, Evergy has made an additional $4 million in investments to support key community development projects in Topeka, Wichita and Pittsburg.

No involuntary layoffs: The company has adhered to its pledge of no involuntary layoffs due to the merger and maintained staffing levels in Topeka and Wichita.

Electric rates study, Kansas prices competitive: Stabilizing prices and maintaining local control were key reasons KCP&L and Westar sought to merge. The companies also promised to publish a study of their electricity prices and how they compared with other utilities as part of the merger agreement.

KCP&L and Westar Energy’s rate study filed today with the Kansas Corporation Commission concludes that the companies’ electricity prices are in line with the national average, are entering a period of rate stability and are well-positioned to meet customers’ needs.

“Prices going forward are expected to be more stable. Our merger brings economies of scale to ongoing operations and future investments. We are ahead of many peers in adoption of renewables, meeting state and federal environmental regulations and investing in infrastructure to ensure reliability and economic growth,” said Chuck Caisley, senior vice president, marketing and public affairs. “For example, Oklahoma’s largest utility just filed a rate request to recover costs in making environmental upgrades similar to those we’ve already completed.”

The study showed that a long-term electricity price advantage Kansas enjoyed eroded in the past decade. The rate study points to four primary factors: plunging natural gas prices; declining industrial use, despite billions of dollars of economic development in Kansas; mandated environmental upgrades and renewable energy investment; and investment to modernize the state’s transmission grid.

While low-cost coal benefitted Kansas through the 1970s into the early 2000s, the shale gas boom coupled with the disproportionate effect of environmental regulations on coal-fueled generation provided advantages to utilities that were more reliant on natural gas-fueled power plants. The cost advantage reached retail customers and wholesale markets alike.

Required investment in developing renewables markets and to meet environmental regulations aligned with a national economic downturn that flattened electricity sales. In times of growing sales, investment has less impact on prices because it is spread over broader sales. While electricity sales were down about 0.7 percent for other study utilities in 2017 compared with 2007, for KCP&L Kansas, they were down 5.5 percent and for Westar Energy, 4.1 percent. Despite these declines, Kansas continued to attract business.

“Kansas is drawing new investment. Since 2010, we’ve attracted more than $4.3 billion in industrial investments including major brands like Mars Chocolate, Cargill, Geico and Spirit Aerosystems,” Caisley said. “Prices are important, but customers also want access to renewable energy, which we can now provide at a competitive price. And customers expect excellent reliability. Without that, nothing else matters.”

Additional information about the study

The study uses 2017 prices available from the U.S. Energy Information Administration (the most recent full year available). In 2018, KCP&L and Westar decreased prices and agreed that base prices wouldn’t change for five years. For the study, KCP&L and Westar Energy examined how their prices compare with 35 investor-owned, vertically integrated electric providers. These companies serve more than 11 million customers in 10 Midwestern states. Some other utilities studied are just entering cycles of investment to meet federal environmental mandates and to update transmission infrastructure. Investments that are just beginning to affect their prices.

About KCP&L and Westar Energy:

Serving approximately 1.6 million customers in Kansas and Missouri, Kansas City Power & Light Company (KCP&L), KCP&L Greater Missouri Operations Company and Westar Energy are the electric utilities of Evergy, Inc. (NYSE: EVRG). Together we generate nearly half the power we provide to homes and businesses with emission-free sources. We support our local communities where we live and work, and strive to meet the needs of customers through energy savings and innovative solutions.

For more information:

515.18.5163 KS Electric Rate Review Handout_single pages