Kansas Legislature cracks down on Evergy overcharging your electric bill | Opinion
Today, I’m going to compliment the Kansas Legislature.
Try to look a little less shocked.
Rest assured I haven’t dropped my opposition to their efforts to “reform” tax policy to benefit the wealthiest among us, or their weird fixation on persecuting LGBTQ+ Kansans, or their attempted defunding of public schools, or their unrelenting efforts to overturn the will of the voters on abortions.
But, I went to a Republican Pachyderm Club meeting last week and found out that there’s at least one set of legislators doing the job we sent them to Topeka to do.
It’s the House Committee on Energy, Utilities and Telecommunications, which shepherded through a bill, House Bill 2225, that will result in tens of millions of dollars in savings on Kansans’ Evergy electric bills. It was signed into law by Gov. Laura Kelly on Thursday.
One of the speakers at the Pachyderm meeting was Rep. Leo Delperdang, a west Wichita Republican who is the freshman chairman of the utilities committee.
He explained how Evergy’s been running transmission projects through a federal regulatory process that allowed the company to reap higher profits at the expense of its customers.
“When we dug in . . . we uncovered $22 million in previous overcharges that will be refunded” to Evergy customers, Delperdang said.
To understand this, you need to know a little bit about how utility rates are set up to account for the costs of new transmission infrastructure.
In Kansas, those costs are passed along to consumers’ bills in what is called the “Transmission Delivery Charge.”
It’s to Evergy’s advantage to put transmission projects through the Federal Energy Regulatory Commission instead of the Kansas Corporation Commission, the state agency that regulates electric rates.
In either process, the company gets to charge customers the full cost of doing its projects, plus a “return on equity,” which is basically the profit pool for Evergy stockholders.
Evergy has two divisions in Kansas with differing rate structures. Evergy Metro serves the Kansas City area, formerly Kansas Power & Light, while Evergy Central serves the rest of the state, the area that used to be Westar Energy.
When projects go through the federal process, the FERC gives Evergy Metro an 11% return on equity, and Evergy Central a 10.3% ROE. Evergy only gets 9.3% if the project goes through the KCC.
That difference adds up to millions in excess profit for Evergy.
Justin Grady, the KCC’s chief of revenue requirements and finance, said the changes brought about by HB 2225 will cut Evergy rates by $10.6 million next year and an additional $2 million annually for the next three years.
The other significant change in HB 2225 is that it allows the KCC to review Evergy’s projects to determine whether they’re necessary, or just profit-padding extras.
Under current law, “all (Evergy transmission) charges are to be ‘conclusively presumed prudent,’ meaning that the KCC’s review of these costs is limited to a mathematical audit of the accuracy of the filing,” Grady testified.
The immediate savings are estimated to be about 47 cents a month for Evergy Central customers and 30 cents a month for Evergy Metro customers. The differential is largely because the Central area is bigger and has more power lines.
It’s not a huge difference in bills, but it’s a sea change in the Statehouse’s attitude toward utility consumer protection.
I’ve covered utilities for more than 20 years in Kansas.
For all of that time until now, the Legislature has been essentially the handmaiden of Evergy, or its predecessor Westar Energy, or before that, Western Resources.
The utilities essentially wrote the laws that govern them, and the utilities committees in the House and Senate were little more than a rubber stamp.
That’s how the KCC got handcuffed on Transmission Delivery Charges in the first place.
So it’s refreshing to see new leadership, especially Delperdang, taking a more proactive and consumer-friendly approach to utility rates.
Let us hope that HB 2225 is only the beginning.
