Evergy Files Kansas First Rate Review in Five Years to Recover Investments to Modernize the Power Grid, Increase Reliability and Enhance Customer Service
Ongoing savings achieved since 2018 exceeded projections, reducing the overall Kansas rate increase request by more than 37%
KANSAS CITY, Mo. – April 25, 2023 – Today Evergy (NASDAQ: EVRG) filed a request and supporting documentation with the Kansas Corporation Commission to recover investments made to improve service to customers with a more reliable and resilient power grid and updated customer service systems. This is the first base rate review Evergy has requested in five years.
Evergy was formed in 2018 by the merger of Westar Energy and Great Plains Energy. As part of the merger approval, Evergy agreed to keep the energy company local by maintaining its Kansas headquarters in Topeka and continuing to invest millions annually in local community organizations and charities throughout its Kansas service area. Evergy also committed to significantly reduce the operating costs of the combined company, to pass those savings on to customers and not to ask for an increase to base rates for five years. Evergy has kept all of those commitments.
For the Evergy Kansas Central service area, the company is requesting a net revenue increase of $204 million or a 9.77% overall rate increase — reflecting a reduction of nearly $89 million in operating costs and other billing line items. If the full request is approved, the monthly bill increase for an average residential customer would be about $14.24. Evergy Kansas Central includes approximately 736,000 customers in Topeka, Pittsburg, Wichita, Hutchinson and other communities in the eastern third of the state. In the Evergy Kansas Metro service area, the company is requesting a net revenue increase of $14 million or a 1.95% overall rate increase — reflecting a reduction of nearly $41 million in operating costs and other billing line items. If the full request is approved, the monthly bill increase for an average residential customer would be about $3.47. Evergy Kansas Metro includes approximately 273,000 customers in Lenexa, Overland Park and other communities near the Kansas City metro area.
“We formed Evergy with a focus of reducing costs and making rates more affordable and competitive. Over the past five years, we have made significant progress towards that goal. Since 2018, our Kansas customers have received $232 million in merger savings and bill credits,” said David Campbell, Evergy president and chief executive officer. “We’ve exceeded our targeted merger savings and shared them with customers. Now, we are seeking to recover investments made to improve the electric grid and build a smarter, more reliable energy future for our Kansas customers.”
This rate review is the first that Evergy has requested in Kansas since the creation of the company in 2018. Offsetting steep inflation in Kansas and the US economy, operational cost savings and merger efficiencies have allowed Evergy to maintain flat rates for Evergy’s Kansas customers over the last five years. Since 2017, overall rates for Evergy Kansas customers have increased just 0.1% and residential rates have decreased 2.5%. During the same time period, other electric utility rates in states surrounding Kansas have increased nearly 13% and the Consumer Price Index (CPI) has increased 20%. In addition, since the merger, Evergy has delivered $232 million in merger savings and bill credits to Kansas customers.
“The merger has helped stabilize prices despite historically high inflation. We have achieved nearly $1 billion in cost savings and efficiencies as a combined company since the merger. This achievement has helped us keep rates flat and has reduced our requested increase for investments made over the last five years by more than 37%,” said Campbell. “From residential customers to large businesses, we know how important it is to keep electricity affordable especially in the wake of record inflation.”
The most significant driver of the rate increase request relates to infrastructure improvement aimed at enhancing reliability and resiliency. While Evergy has a track record of solid performance, as the electric system ages, modern upgrades are needed to maintain and improve reliability. Evergy has made significant improvements over the past several years focused on the power grid, with a goal of making it more resistant to outages from severe weather and improving resiliency to restore power faster when outages occur. Some of those improvements include rebuilding aging power lines and equipment and adding advanced automation technology that can reduce the impact of power outages by isolating the cause of the outage more quickly. In addition, Evergy is leveraging data analytics to improve its ability to identify areas at risk for outages, allowing it to target maintenance and replacement work, driving reduced outages and operating costs.
“A resilient, reliable power grid is critical for our customers. A modern power grid deploys automation to run more efficiently and effectively and must be hardened and maintained against physical threats, including the extremes of Kansas weather, and equipped with secure communication devices that help prevent and shorten power outages,” Campbell said. “Five years after creating Evergy, we remain local and invested in the communities we serve. We have reduced our operating costs, our rates are more competitive, our power generation is more sustainable, and our service is more resilient.”
As part of the rate review, Evergy has requested an increased allowance for depreciation of investments to ensure that recovery of costs associated with an asset is aligned with the useful lives of those assets and the customers who benefit. Evergy has also asked to include funding for expected dismantlement costs to provide for appropriate decommissioning of power plants upon retirement.
This rate increase request includes investments made to replace legacy customer service systems with new, shared systems that provide for greater efficiency and that enable customer experience enhancements. This single platform enabled us to increase the number and types of online and self-service transactions either on the phone or online. Evergy has also expanded and improved payment capabilities, start and stop service, outage management capabilities, outage and billing notifications and energy management tools. In September 2022, Evergy launched a mobile app that includes often-used capabilities from the website.
The Evergy Kansas Central request includes recovery of its share of costs of IT systems shared across all Evergy customers. These shared systems are a key enabler of merger efficiencies that have resulted in savings of more than $110 million annually for Evergy Kansas Central customers, far exceeding the cost included in the request. Resolution of legacy Evergy Kansas Central items that constitute nearly $56 million of the rate increase request include the expiration of wholesale energy contracts which had contributed to lower rates during the contract term and managing the previously established end to a corporate owned life insurance program initiated in 1985.
Kansas rate requests follow an 8-month process before the Kansas Corporation Commission (KCC). New rates will become effective in December 2023. As part of the process, Evergy must demonstrate that its request is warranted, and the supporting costs are prudent. Evergy and other interested parties representing the Commission and consumers will submit and exchange information through briefs and filings available on the KCC website.
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About Evergy, Inc.
Evergy, Inc. (NASDAQ: EVRG), serves 1.7 million customers in Kansas and Missouri. Evergy’s mission is to empower a better future. Our focus remains on producing, transmitting and delivering reliable, affordable, and sustainable energy for the benefit of our stakeholders. Today, about half of Evergy’s power comes from carbon-free sources, creating more reliable energy with less impact to the environment. We value innovation and adaptability to give our customers better ways to manage their energy use, to create a safe, diverse and inclusive workplace for our employees, and to add value for our investors. Headquartered in Kansas City, our employees are active members of the communities we serve.
