Ongoing savings achieved since 2018 exceeded
projections, reducing the overall Kansas rate increase request by
more than 37%
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.
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Regional changes in electricity rates
(Graphic: Business Wire)
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.
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.
Forward Looking Statements
Statements made in this document that are not based on
historical facts are forward-looking, may involve risks and
uncertainties, and are intended to be as of the date when made.
Forward-looking statements include, but are not limited to,
statements relating to Evergy's strategic plan, including, without
limitation, those related to earnings per share, dividend,
operating and maintenance expense and capital investment goals; the
outcome of legislative efforts and regulatory and legal
proceedings; future energy demand; future power prices; plans with
respect to existing and potential future generation resources; the
availability and cost of generation resources and energy storage;
target emissions reductions; and other matters relating to expected
financial performance or affecting future operations.
Forward-looking statements are often accompanied by forward-looking
words such as “anticipates,” “believes,” “expects,” “estimates,”
“forecasts,” “should,” “could,” “may,” “seeks,” “intends,”
“proposed,” “projects,” “planned,” “target,” “outlook,” “remain
confident,” “goal,” “will” or other words of similar meaning.
Forward-looking statements involve risks, uncertainties and other
factors that could cause actual results to differ materially from
the forward-looking information.
In connection with the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995, Evergy, Inc., Evergy
Kansas Central, Inc. and Evergy Metro, Inc. (collectively, the
Evergy Companies) are providing a number of risks, uncertainties
and other factors that could cause actual results to differ from
the forward-looking information. These risks, uncertainties and
other factors include, but are not limited to: economic and weather
conditions and any impact on sales, prices and costs; changes in
business strategy or operations; the impact of federal, state and
local political, legislative, judicial and regulatory actions or
developments, including deregulation, re-regulation, securitization
and restructuring of the electric utility industry; decisions of
regulators regarding, among other things, customer rates and the
prudency of operational decisions such as capital expenditures and
asset retirements; changes in applicable laws, regulations, rules,
principles or practices, or the interpretations thereof, governing
tax, accounting and environmental matters, including air and water
quality and waste management and disposal; the impact of climate
change, including increased frequency and severity of significant
weather events and the extent to which counterparties are willing
to do business with, finance the operations of or purchase energy
from the Evergy Companies due to the fact that the Evergy Companies
operate coal-fired generation; prices and availability of
electricity and natural gas in wholesale markets; market perception
of the energy industry and the Evergy Companies; the impact of the
Coronavirus (COVID-19) pandemic on, among other things, sales,
results of operations, financial condition, liquidity and cash
flows, and also on operational issues, such as supply chain issues
and the availability and ability of the Evergy Companies’ employees
and suppliers to perform the functions that are necessary to
operate the Evergy Companies; changes in the energy trading markets
in which the Evergy Companies participate, including retroactive
repricing of transactions by regional transmission organizations
(RTO) and independent system operators; financial market conditions
and performance, including changes in interest rates and credit
spreads and in availability and cost of capital and the effects on
derivatives and hedges, nuclear decommissioning trust and pension
plan assets and costs; impairments of long-lived assets or
goodwill; credit ratings; inflation rates; the transition to a
replacement for the London Interbank Offered Rate (LIBOR) benchmark
interest rate; effectiveness of risk management policies and
procedures and the ability of counterparties to satisfy their
contractual commitments; impact of physical and cybersecurity
breaches, criminal activity, terrorist attacks, acts of war and
other disruptions to the Evergy Companies’ facilities or
information technology infrastructure or the facilities and
infrastructure of third-party service providers on which the Evergy
Companies rely; impact of the Russian, Ukrainian conflict on the
global energy market; ability to carry out marketing and sales
plans; cost, availability, quality and timely provision of
equipment, supplies, labor and fuel; ability to achieve generation
goals and the occurrence and duration of planned and unplanned
generation outages; delays and cost increases of generation,
transmission, distribution or other projects; the Evergy Companies’
ability to manage their transmission and distribution development
plans and transmission joint ventures; the inherent risks
associated with the ownership and operation of a nuclear facility,
including environmental, health, safety, regulatory and financial
risks; workforce risks, including those related to the Evergy
Companies’ ability to attract and retain qualified personnel,
maintain satisfactory relationships with their labor unions and
manage costs of, or changes in, wages, retirement, health care and
other benefits; disruption, costs and uncertainties caused by or
related to the actions of individuals or entities, such as activist
shareholders or special interest groups, that seek to influence
Evergy’s strategic plan, financial results or operations; the
impact of changing expectations and demands of our customers,
regulators, investors and stakeholders, including heightened
emphasis on environmental, social and governance concerns; the
possibility that strategic initiatives, including mergers,
acquisitions and divestitures, and long-term financial plans, may
not create the value that they are expected to achieve in a timely
manner or at all; difficulties in maintaining relationships with
customers, employees, regulators or suppliers; and other risks and
uncertainties.
This list of factors is not all-inclusive because it is not
possible to predict all factors. You should also carefully consider
the information contained in the Evergy Companies’ other filings
with the Securities and Exchange Commission (SEC). Additional risks
and uncertainties are discussed in the Annual Report on Form 10-K
for the year ended December 31, 2022, filed by the Evergy Companies
with the SEC, and from time to time in current reports on Form 8-K
and quarterly reports on Form 10-Q filed by the Evergy Companies
with the SEC. Each forward-looking statement speaks only as of the
date of the particular statement. The Evergy Companies undertake no
obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by law.
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version on businesswire.com: https://www.businesswire.com/news/home/20230424005982/en/
Media Contact: Gina Penzig Sr. Manager Corporate
Communications Phone: 785.508.2410 gina.penzig@evergy.com Media
Line: 888-613-0003
Investor Contact: Pete Flynn Director, Investor Relations
peter.flynn@evergy.com O: 816-652-1060
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