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.

During the recent heat wave, I’m almost certain my air conditioner was making an odd noise. No, it wasn’t a hum or a rattle. More like a chant: I’m going to take all your money. I’m going to take all your money. I’m going to take all your money.

Just imagine what it would say if electric rates in Lawrence and the surrounding area increase by more than 9%.

That’s a possibility with the latest rate proposal from Evergy, the state’s largest electric utility and the dominant power provider in the Lawrence area. But that nearly double-digit rate increase became less likely this week. The staff of the Kansas Corporation Commission, the state-appointed board that regulates public utilities, has come out against Evergy’s rate plan.

Before you celebrate too much, though, know that the KCC staff is supporting a rate increase, albeit a significantly smaller one than what Evergy is seeking.

The KCC staff found that a rate increase of 1.66% would be justified given the operating costs of Evergy. That’s an increase, but a far different one from the 9.77% increase that Evergy is seeking.

An increase of 9.77% would add nearly $15 per month to the average residential electric bill, Evergy has previously estimated. An increase of 1.66% would amount to about a $2.50 per month increase in the average residential bill, according to my math.

Don’t start counting your dimes and nickels just yet, though. The matter is far from resolved. The KCC staff is just one of many voices in this case. Business interests from across the state, some school districts and other big electricity users have been providing testimony in the matter. Evergy, which is the company that was created when Westar Energy merged with the parent company of Kansas City Power & Light in 2018, has produced a long list of energy and financial experts to testify on its behalf.

Still, the KCC staff finding is probably near the top of the list when it comes to important information the KCC board will consider when making its decision, which likely will come in December or January.

Evergy’s proposed 9.77% increase in rates is for just one of its service territories, which it calls Evergy Kansas Central. It serves about 740,000 customers in cities that include Lawrence, Topeka, Wichita, Olathe, Leavenworth, Manhattan, Salina, Hutchinson and Emporia, among other rural areas and towns.

Evergy has a different rate increase proposal for its other main Kansas territory, which it calls Evergy Kansas Metro. That territory primarily serves Lenexa, Overland Park and other communities near the Kansas City metro area.

While that rate proposal won’t impact Lawrence customers directly, it may cause the blood pressure of a few Lawrence residents to rise. While Lawrence is on the hook for a possible rate increase, the KCC staff is recommending a significant rate reduction for Evergy’s KC metro customers.

The KCC staff has determined that a 7.32% rate decrease is justified for the KC metro area, based on Evergy’s operating costs for that area. Evergy is seeking a rate increase of 1.95%.

If you are scoring along at home, based on my math and some previous information provided by Evergy, it looks like the average residential customer in Evergy’s KC metro district would save about $13 per month under the plan endorsed by the KCC staff.

photo by: Sherman Smith/Kansas Reflector

Evergy headquarters in downtown Topeka. The company is preparing to file with Kansas regulators to create energy efficiency programs for its customers.

As for why customers in the KC metro area would be getting a rate decrease while those in Lawrence and elsewhere are getting an increase, that has to do with the amount of investment Evergy is making in infrastructure upgrades and its operating costs in each area. The idea is that Evergy is allowed to recoup its investment in infrastructure through additional rates. When the company makes changes to its operations that save money, it also is supposed to pass some of those savings along in the form of rate reductions or credits. In sum, infrastructure investments in the Kansas Central district have been more expensive, and the operating savings Evergy has found have been more substantial in the KC metro district.

Thus, rising rates for the district that includes Lawrence and potentially shrinking rates for the KC metro. However, it should be noted that electric bills in the metro area — even if the rates are reduced — are still generally higher than those in the Kansas Central district.

It will be interesting to watch how this rate increase makes its way through the KCC. The financial impacts are probably as large or larger than many tax increases contemplated by local governments. The three-member Kansas Corporation Commission will be the final decider in the case.

Like many of these cases, it may come down to how much profit the regulators believe a utility should reasonably be allowed to make. Evergy is seeking to earn a 10.25% return on equity, which is basically equivalent to a return on investment. That would be up from the 9.3% return on equity that regulators currently have authorized for the utility.

Evergy officials have argued the greater ROE is justified because the financial environment is becoming riskier, and it needs to earn a greater return to attract an adequate number of investors and lenders that provide the company with the capital it needs to invest in the electric system.

Evergy also is highlighting that this is the first rate increase it has sought since the merger of Westar and KCP&L’s parent company in 2018. The company estimates it has saved more than $150 million in operating costs by combining the two companies, and it has shared those savings with customers over the last five years.

“We’ve exceeded our targeted merger savings and shared them with customers,” David Campbell, Evergy president and chief executive officer, said in April when the company proposed the rate increases. “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.”