The Coronavirus Cut Off Plans That Might Have Lowered Electricity Bills In Kansas

Jun 12, 2020

WICHITA, Kansas — At the beginning of the year, independent consulting firm London Economics released a study of Kansas electric rates — how they’re developed, why they’re more expensive than neighboring states and some suggestions on how to change that.

Legislators seemed poised to act on some of the recommendations until the coronavirus struck and shortened their session by several weeks. Some consumer and environmental advocates say the abrupt stop cut the time and energy given to critical policy aimed at reducing your utility bills.

“We can essentially write this up as a whole year and legislative session lost as far as moving energy policy forward,” said Zack Pistora, lobbyist for the Kansas Sierra Club, an environmental advocacy group.

The Legislature ordered the study in 2019 to get an independent view on the relatively high cost of electricity in Kansas.

Both consumer advocates and utility companies said they felt most of the consultant’s recommendations were reasonable. They served as a blueprint for ideas such as creating a new state energy office and implementing lower rates to help lure and keep businesses. It also floated the idea of giving utilities a financial tool called “securitization” that would let lower interests on the loans the pay and, consequently, cut rates for customers.

There seemed to be some genuine momentum on these issues. After all, lawmakers commissioned the consultant’s work, and they held hearings on bills that would put the recommendations into practice. Then, in mid-March, the coronavirus pandemic struck and the Legislature essentially stopped weeks earlier than normal.

What Wasn’t Passed

Consumer and environmental advocates had high hopes for legislation recommended in the London Economics study. That started with the creation of a state energy office that would set priorities for things like what types of energy to develop and how to reduce costs.

Gov. Laura Kelly’s proposal to create that office was voted down on the last day the Legislature met in March. Dorothy Barnett of the Climate and Energy Project was a supporter of the plan and believes that it was used as a bargaining chip in the debate over Medicaid expansion and an effort to put an anti-abortion amendment in the state consutitution.

“If there had been more time before any kind of a vote was taken,” she said, “we may have been able to get that moving.”

The London Economics study argued securitization would open the way for refinancing debt on coal-fired plants, taking advantage of lower interest rates with savings that could get passed on to customers. Lowering the cost on the debt, the consulting firm argued, might also let utilities shutdown those inefficient plants earlier.

But it’s a complicated subject and advocates said legislators just didn’t have enough time to really look into it this year.

“It’s a big enough issue that we’re going to get right back into it (next year),” Jim Zakoura, president of the Kansas Industrial Consumers Group said.

Similarly, a push to subsidize business and consumer purchases of more energy-efficient appliances and thermostats fell victim to a session cut short and mired in partisan issues. So far, no major utility has taken advantage of a law passed in 2014 intended to clear the way for those changes. Even though electricity utility Evergy supports changes to the law that would make it easier for the company to implement, its lobbyist didn’t have much confidence the bill would pass this year.

“It’s unlikely that coronavirus and the way the session ended impacted that bill from a passage standpoint,” Chuck Caisley, Evergy’s chief customer officer said.

But others considered it a missed opportunity.

“We need to do better with energy efficiency,” Barnett said. “We need to be able to offer people programs to help them save energy and ultimately save money.”

What Was Passed

But not every effort to lower your electricity bill fell by the wayside. When legislators came back for a day in May to finish up the session, they passed two provisions aimed at saving customers money. One clarified a utility’s ability to create special lower rates for businesses it's trying to attract to the state.

Zakoura said Kansas’ higher electric prices, which are 20 to 40 percent higher per kWh than Missouri and Oklahoma, have scared away some businesses in the past, and the ability to offer special rates is a step in the right direction.

The second provision eliminated the ability of utilities to recover state income tax payments through customer bills. Major utility companies like Evergy haven’t had to pay state income tax for at least five years, yet customers were still being charged as if they had.

“There’s a big beneficiary and that is retail ratepayers in Kansas, who will see their rates reduced by, we estimate to be $40 to $50 million dollars a year,” Zakoura said.

The economic pain triggered by the coronavirus pandemic might actually boost changes in utility regulation next year.

“There’s folks that need jobs,” Pistora said. “Could they get jobs doing home repairs to help people save energy? Could they do jobs, in a pandemic, safely outside installing solar?”

Brian Grimmett reports on the environment, energy and natural resources for KMUW in Wichita and the Kansas News Service. You can follow him on Twitter @briangrimmett or email him at grimmett (at) kmuw (dot) org. The Kansas News Service is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains Public Radio focused on health, the social determinants of health and their connection to public policy.

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