Kansas rising electric rate-making process favors utilities
WICHITA, Kan. (AP) — An independent review of Kansas’ rising electricity prices shows the process used for setting rates favors utilities and could be improved.
Lawmakers concerned that electricity prices were no longer competitive with neighboring states requested the study by London Economics in a bill passed during the 2019 legislative session, according to the Kansas News Service.
The review also found that state regulators can’t do much to protect consumers from costs arising from the utilities underused investments and that rates are padded with additional bill surcharges.
Analysts considered the rates of all Kansas power providers, including co-ops, municipals and Evergy, the largest utility in the state with about 1.5 million customers, according to the review released Wednesday.
“There are some near-term recommendations,” Evergy Chief Customer Officer Chuck Caisley said. “But the report doesn’t say, ‘Do this and rates will go down’ on any page, any graph, any appendix in the entire thing.”
The report concludes that there is no single, easy fix to reducing Kansas’ electricity rates, but it offers three suggestions.
It recommends that the Kansas Legislature create a state energy plan and require utilities to regularly submit an integrated resource plan. Ideally, this would encourage utilities to use the most cost-effective methods for meeting the state’s goals on pricing, future transmission needs and renewable energy.
The analysts also suggest that lawmakers consider performance-based regulation, with the state setting targets to push electric companies to be more efficient.
Lastly, the report says the legislature could legislate for utilities to refinance their loans on older, uneconomic investments. This process, known as securitization, could potentially ease the financial burden when utilities have to shut down coal-fired power plants and other, less profitable long-term investments.
Caisley says Evergy largely supports the recommendations, but it’ll need to work out the details of any proposed legislative changes.
Legislators in the House and Senate Utilities Committees are expected to be briefed on the report’s findings when the session begins next week.