Evergy electric rate hike approved by Kansas regulators. Here's how much more you'll pay

Kansas regulators voted 3-0 on Tuesday to approve a utility rate increase for most customers of electric monopoly Evergy.

The Kansas Corporation Commission order during Thanksgiving week came a month earlier than expected, as the schedule hadn't called for an order until shortly before Christmas.

"The order seeks to balance the financial interests of Evergy with the protection of the substantial interests of Kansas Evergy ratepayers," said Dwight Keen, one of the three commissioners. "In my opinion, the order achieves this balancing goal."

The KCC approved the unanimous settlement agreement previously signed onto by Evergy, KCC staff and other interested parties. The new rates will kick in with the billing cycle beginning Dec. 21.

David Campbell, Evergy president and CEO, called the approved settlement "a strong result for our Kansas customers."

"Today's approval means our Kansas customers' average rates will have increased just 1 percent in the last five years — well below inflation and electric rate increases in neighboring states over the same time period," he said. "This decision also allows Evergy to recover investments made to strengthen the electric grid and provide reliable, affordable, and sustainable service to our customers across the region."

The rate increase is the first since Evergy was formed in 2018 through a merger of Westar Energy and Kansas City Power and Light.

"We are setting the current going forward rates and pricing for electricity for two thirds of the customers within the state of Kansas," said Andrew French, the commission chair. "I do believe, looking at this and the end result, customers are getting very good value for the product given how much we rely on that service and how much of it is needed. But that's not to say that there's not work to be done. There are a lot of pressures coming in the future."

French said there is more work to be done as utilities face future pressures of infrastructure costs, adding new energy generation and supplying enough electricity for growing demand.

"It's going to be very important that we continue to make energy affordable," he said. "We've got a lot of work to do to make sure that we keep energy reliable and we need to — after we keep those primary goals in mind — I think we need to continue responsibly and stably transitioning to cleaner and more environmentally sustainable electric generation sources."

How much will electric bill increase for Kansas residents?

Electric rates in the Evergy Kansas Central service area will increase by about 3.5% instead of the 9.8% the utility originally requested.

That means an average homeowner or renter will pay an extra $4.64 more per month. The original Evergy proposal would have increased average residential monthly utility bills by $14.24.

The central service area is the old Westar territory, covering much of the eastern half of Kansas, including Topeka, Wichita, Pittsburg and some areas of the Kansas City metro.

Who gets a utility rate decrease?

Ratepayers in the Evergy Kansas Metro service area would see a decrease of about 4.5% instead of the 2% increase originally requested.

That means the average residential customer would pay $6.07 less per month, as opposed to a $3.47 increase.

The metro area is the old Kansas City Power and Light service territory, covering most of the Kansas City metro and some areas of exurban counties.

More: Evergy wants to increase your electric rates. Here's what to know and how to speak out

How much more money will Evergy make?

Evergy will collect $41 million more in revenue from ratepayers.

The central service area will pay $74 million more while the metro area pays $33 million less.

Campbell, the Evergy CEO, told investors earlier this month to expect slower profit growth due to "the disappointing results of the Kansas rate case." What had been a projection of 6% to 8% growth in earnings is now down to 4% to 6%.

The slower projected growth comes after Evergy posted record profits last year. The company's adjusted earnings totaled $854 million in 2022, translating to $535 million in cash dividends at $2.37 per share paid to EVRG stockholders.

For the first nine months of this year, Evergy has profited $755 million.

More: Evergy tells investors to expect less profit growth after 'disappointing' Kansas rate case

What did Evergy originally ask for?

The electric utility monopoly had originally wanted a total $218 million increase in revenue from Kansas customers when it filed its rate case in April.

As a whole, the central region would have paid $204 million more a year, with the metro region adding $14 million.

In August, KCC staff recommended cutting Evergy's total revenue from ratepayers by $18 million. Their financial audit justified a $35 million revenue increase in the central region, but called for a $53 million cut in the metro region.

Why did KCC staff agree to a rate increase after calling for a decrease?

When testifying in support of the settlement agreement, KCC staffer Justin Grady said there was no specific calculation to support the $41 million total revenue increase.

"There is no specific calculation identified in the Agreement that supports these amounts; therefore, each party will likely have a different understanding of the concessions agreed to in order to produce this result," he wrote.

He cited some of the concessions made during negotiations and acknowledged that Evergy caught computational errors made by the KCC staff. In the end, the central region's rate increase had $8.5 million not attributed to any specific reason, while the metro region had $7.5 million.

Together, that is $16 million in revenue to Evergy that KCC staff indicated was not needed. But they agreed to it anyway in exchange for Evergy not fully litigating the rate case, which posed a risk of a higher rate increase from the commissioners siding with Evergy on some points of contention and Evergy needing more money to cover the additional regulatory expenses.

"Staff recognized litigation risk did exist on some adjustments proposed in the case; therefore, Staff determined it was reasonable to make certain concessions to account for that risk and to arrive at the ultimate Settlement Agreement," Grady said.

Who makes the decision?

The three KCC commissioners voted to approve the settlement agreement during Tuesday's meeting.

The commissioners are French, Keen and Annie Kuether, who was appointed by Gov. Laura Kelly earlier this year. They opted to cut short their evidentiary hearings, which had been scheduled for five days, for a three-hour hearing on the agreement in October.

"I think all of us have been living, eating and breathing this for so long," she said about not having any further questions on the order.

The KCC did hold public hearings in Topeka, Overland Park and Wichita and accepted public comment submissions. The filing with submitted comments totaled 4,122 pages.

More: Topekans aren't happy about Evergy's plan to raise electric rates. Will regulators listen?

Jason Alatidd is a statehouse reporter for the Topeka Capital-Journal. He can be reached by email at jalatidd@gannett.com. Follow him on X @Jason_Alatidd.

This article originally appeared on Topeka Capital-Journal: Evergy electric rate increase approved by Kansas utility regulators