Kansas committees spend 6 hours pushing Evergy for answers on grid update costs
For six and a half hours, the Kansas Corporation Commission and other intervening groups asked Evergy questions about its new plan to expand renewable energy and modernize its grid, what it would cost consumers and how much of it was the result of a New York investor putting pressure on the utility.
Advocates pressed Evergy as to whether its renewable energy expansion plan was aggressive enough to meet the growing threat of climate change and keep up with the president-elect Joe Biden’s promise of a clean energy grid by 2035.
The Dec. 3 hearing was the first of three workshops the KCC scheduled, during which the KCC can ask Evergy executives questions to learn more about the plan. Evergy is to collect feedback from the KCC and other stakeholders and return with an improved plan in May.
At the behest of several advocacy organizations to aid transparency, the KCC opened the workshops to the public and they were live-streamed for the first time.
“We must use forms like these to learn from the company, to learn from other stakeholders, and if I have my way, we will do more of these on a lot of issues,” said Susan Duffy, chair of the KCC. “It furthers our understanding; it is helpful for commissioners (and) I do believe that it adds value to the subject that we are discussing.”
Evergy had announced its sustainability plan earlier this year in August, after a significant investor, Elliott Management Corp., pushed the utility to either invest in its infrastructure and increase renewable energy or seek a sale.
Evergy’s plan calls for a total of $8.9 billion in capital investments in Kansas and Missouri, which would help the utility upgrade its grid, fix aging infrastructure and transition to renewable energy, such as solar and wind energy.
Of that, $3.5 billion would be spent over the next five years on grid modernization in Kansas, but Evergy could not answer how much of the grid would be modernized under this plan.
Evergy’s main goal is to lower its overall net fuel and operating costs by 25%, a savings the utility says it will pass on to consumers so the state’s electric rates will be more competitive with other states.
“Pursuing generation evolution that is cost-effective for current and future customers is our definition of sustainability,” said Kevin Bryant, Evergy’s executive vice president and COO. “It’s not just green for the sake of being green.”
Evergy executives said the plan would allow them to cut CO2 emissions, a major greenhouse gas that contributes to climate change, by 85% by 2030.
This is not exactly in line with what president-elect Biden has promised, which is 100% clean electricity by 2035, leading to some pushback on Evergy’s plan from the commission and other organizations, who asked if the utility would be ready for plans or grants handed down from the federal government.
“We don’t have to wait for an energy policy to make the right decisions for our customers,” said Bryant, who anticipates gridlock in D.C. when it comes to an energy plan. “We aren’t going to be on the ‘bleeding edge.’ We want to make sure we are paced in how we deploy new technologies, and if there are new incentives for renewable storages, obviously, we will be prepared to adopt those, as it makes sense.”
Renewable energy
In 2010, coal was 50% of the source of energy for Evergy, which was then known as Westar. As of this year, that has dropped to 39%, and renewable energy comprises 28%.
Under Evergy’s new plan, coal would be scaled back to 34% and renewable energy would provide one-third of Evergy’s electricity in five years.
Ty Gorman, a representative of Kansas’ Sierra Club, pushed for answers from Evergy as to why they had only planned for a 5% switch from coal to renewable energy over the next five years.
“It’s been acknowledged in this call that renewable technologies are ready, storage technologies aren’t far behind and renewable production is much cheaper than any other type of production, especially coal. You’ve talked about pressures from investors, insurance, and likely executive actions .. .from the (federal) administration to meet their goal,” Gorman said. “What barrier do you see in decarbonizing at a rate that is in line with scientific national and international goals that are being set for 2030?”
With the focus on reducing carbon, it was also suggested that Evergy study utility plans in other states that incentivize smaller electrical generation and management at the local and residential level. This can be done using technology like solar panels, electric vehicles and home battery storage.
“If the utilities are incentivized to suppress the very thing that we should be building, because we lock in billions of dollars of grid modernization, without keeping this in mind, we are squandering ratepayer dollars,” said Dorothy Barnett, executive director of Climate and Energy Project.
“As I reviewed grid modernization plans from across the country, they seemed to focus more and first on rapid decarbonization of coal plants, and then secondary, deep integration” of solar and wind arrays.
Evergy executives said it would need more time to phase out coal plants and to build more solar and wind arrays, according to Kayla Messamore, Evergy’s director of long-term planning. The utility is hesitant to phase out coal before it has renewable energy arrays with the proper capacity to take over.
Under Evergy’s plan, the electricity it gets from natural gas, which accounts for 26% of its capacity, and nuclear, at 7%, would remain unchanged.
“As you talk about decarbonization, the gas portion remains the same. I don’t get that,” Duffy said. “Some of those plants are antiquated and they are spewers of toxic waste...I understand that they are very necessary, but there’s been no discussion.”
While the percentage of energy capacity from natural gas will not change, that doesn’t necessarily reflect what sources Evergy is using to create electricity, according to Darrin Ives, vice president of regulatory affairs.
“It doesn’t represent the energy that’s produced and delivered to customers,” Ives said.
Cost to Kansas consumers
Consumers would not see high rate increases because of this plan but would see a price hike that would stay in line with inflation, according to Evergy executives. But the KCC commission chair pushed back, chiding Evergy for its “casual” attitude when talking about rate hikes.
“I would remind you that there are still folks making $10 an hour below the cost of inflation and they’ve never received a pay increase,” Duffy, the KCC chair, said. “You talk with such casualness about a rate increase that appears to be insignificant. But my concern with the way we do business .. .is this just going to be one rate increase on top of another, on top of another?”
Several Evergy executives said their intent was not to come off as casual and that they take rate increases seriously.
“Rate competitiveness and impact on customers was one of the key things we looked at as we went through this,” Ives said. “It does take money to make a transition to the next level of assets that can serve for...hopefully, the next 30 years.”
A grid upgrade will mean that customers will save money in other ways, such as fewer outages and maintenance, which will lead to lower operating costs for Evergy. But KCC staff insisted Evergy should be more specific in the benefits for consumers.
“The benefits are described by happy adjectives, things like ‘increased reliability,’ ‘improved resiliency’ ‘reductions in restoration times,’ with no real hard numbers to put on that,” said Leo Haynos of the KCC staff. “I really think in any project of this magnitude, we really should be trying to illustrate those improvements that occur. We want to show the customers what they are getting for their investment.”
Purpose of the plan
Evergy’s sustainability plan was announced earlier this year, after a major investor, Elliott Management Corp., had put pressure on the utility to either invest in infrastructure and renewable energy or seek a sale. Because of this, the KCC and other intervenor groups put pressure on Evergy to defend the necessity of its plan.
“What would have happened if Elliott had not walked through your doors and made these pirated demands of the company?” Duffy asked. “Would we be talking about a Sustainability Transformation Plan right now?... How was it that you were able to pull this together in such a relatively short amount of time with such big dollars attached to it?”
Evergy executives said that while they were listening to an investor’s feedback, they had thought of taking these steps for several years to become a more efficient company that invested in grid modernization while reducing carbon emissions.
“We are taking a systematic approach and we will not have the system completely rebuilt in five years,” said Bruce Akin, vice president of transmission and distribution. “When you look at our infrastructure, we have gotten the most good out of it that we can and we think we’ve gotten to a point where reliability will truly start impacting our customers.
Evergy will present how its plan will change operational efficiencies during a hearing 10 a.m. Dec. 21. The hearing will be open to the public and will be live-streamed on the KCC’s Youtube.
This story was originally published December 6, 2020 at 6:01 AM with the headline "Kansas committees spend 6 hours pushing Evergy for answers on grid update costs."
