photo by: Mike Yoder/Journal-World File Photo

A flock of birds glides over a field east of Evergy's Lawrence Energy Center in this file photo.

State regulators on Tuesday expressed concerns about whether billions of dollars in planned energy projects by Evergy would ultimately produce unnecessary increases in electric rates.

The Kansas Corporation Commission issued an order requiring Evergy — the state’s largest electric utility — to better explain $10.4 billion worth of future capital expenditures the public utility has planned between now and 2025.

The KCC, the state’s chief utility regulating body, issued the order after spending months reviewing a “sustainability transformation plan” that Evergy announced last year. Evergy has said the plan is needed to improve reliability of its electric service and to better position the company for the future. Detractors, though, have argued the plan has been too heavily influenced by activist investor Elliott Management, which owns hundreds of million of dollars in Evergy stock and is simply seeking to boost the company’s stock value.

On Tuesday, the KCC didn’t go so far. It did not issue a ruling on the company’s transformation plan and took no action to stop the company from implementing any part of it. Rather, it said the company by Feb. 28 needs to file a report better explaining the $10.4 billion of Kansas projects the plan calls for.

However, the KCC board did highlight that it also wants Evergy to not become too concerned about pleasing Elliott Management over the interests of Kansas ratepayers.

“As a regulated utility, Evergy’s investment decisions, including the timing of investments, should not prioritize shareholder interests to the detriment of ratepayer interests,” the KCC said in its formal order.

The multi-month review by the KCC showed there are major disagreements about how future spending by Evergy will impact the electric rates that households and businesses in the state pay. The Kansas Industrial Consumers Group argued that ratepayers in Evergy’s Kansas territory would see a 10% to 11% rate increase by 2024, making it one of the largest electric increases in state history.

Evergy, though, has argued the group’s analysis is wrong, and pointed to recent reductions in electric rates, saying residential rates decreased by 6.5% from 2017 to 2019, while industrial rates decreased by 2.8% during the same time period.

What is more certain is that any rate increases related to the billions in spending aren’t likely to happen immediately. Evergy — which was created with the merger of Kansas City Power & Light and Westar Energy — agreed as part of that merger to not bring forward a major rate case to regulators for five years. That five-year period lasts until late 2023. The KCC would be asked to approve future rate increases.

Evergy has projected that the future projects will increase electric rates at a rate less than inflation. That metric, though, has created concern with other groups as inflation has been soaring recently.

“I want to point out that if we are tying our rates to inflation, we are on the wrong metric,” David Nickel, consumer counsel for the Citizens’ Utility Ratepayer Board, told the Journal-World. “We have to be looking at what people can afford.”

Nickel, though, said Evergy does have projects it needs to complete, and that a lot of Evergy’s infrastructure is old and may need to be replaced or upgraded in order to keep the system reliable. But he said there is a balancing act with those types of improvements.

“No matter how reliable the service is, if you can’t afford it because of rates, reliability doesn’t mean much,” Nickel said.

A spokeswoman for Evergy said the company is reviewing the KCC’s most recent order as it figures out its next steps.

“Evergy provided substantial information to the commission and intervenors regarding development and execution of the sustainability transformation plan,” Evergy spokeswoman Gina Penzig said. “The support of our regulators is essential, and we will continue to maintain an open, collaborative dialogue with them.”

In its statement, Evergy — which is the electricity provider in Lawrence and also operates a coal-fired plant just outside the city limits — also said there are strategies that will allow the company to “transition our fleet to more modern sources, while mitigating the impact on rates.”

“We agree with the commission that affordability and regionally competitive rates are important,” Penzig said. “Keeping electricity affordable and having competitive rates are top priorities for us.”