Consultants hired by the Legislature to examine Kansas' unusually high electric rates bullet-pointed the obvious: Kansas has neglected to develop a comprehensive plan defining the state's energy future.
Interests as diverse as the Kansas Municipal Utilities association to the Climate and Energy Project of Kansas praised London Economics International for urging Kansas to craft the type of benchmark plan operational in more than two-thirds of states. Democratic Gov. Laura Kelly expressed interest in crafting a broad-based framework for guiding energy policy.
Dorothy Barnett, executive director of the Climate and Energy Project, said investment, regulation and coordination of electric service would continue in a haphazard way without a blueprint for blending consumer and utility company interests.
"We're undergoing a transformational time in energy and electricity," Barnett said on the Capitol Insider podcast produced by The Topeka Capital-Journal. "We have the battle of climate change moving forward. We've seen renewable energy provide great economic value in Kansas, but we do it sort of willy-nilly. We don't have a plan that's going to take us into the future."
Colin Hansen, executive director of the municipal utility group, said the Kansas Energy Council offered that kind of guidance before it disbanded in 2008.
"Fifteen years ago, I had the unique opportunity to chair the Kansas Energy Council when it embarked upon a similar process," Hansen said. "The council’s work laid a foundation from which we can build on going forward."
The 2019 Legislature overwhelmingly voted to finance the independent study of electric rates despite objections from some utility companies concerned the analysis would offer damning evidence of excessive retail rates.
The first phase of London Economic's study delved into competitiveness of Kansas' rates, the current rate-setting process, balancing of utility profits and public-interest objectives, and expenditures on transmission and renewable energy resources. The second-phase in July will explore investments in electricity transmission infrastructure, charging stations for electric vehicles and the impact of electric rates on economic development.
In addition to recommending Kansas establish a state energy plan, consultants said each utility should regularly file forward-looking integrated resource plans with regulators. It would serve as an open window into how utility companies plan to meet future electricity needs.
The consultants urged Kansas to consider allowing power companies to refinance debt to speed retirement of inefficient power plants, create effective energy conservation programs and require broader analysis of rate-adjustment requests from utility companies.
Gina Penzig, spokeswoman for Evergy, the company formed by merger of Westar and KCP&L, said the study by London Economics was a thoughtful assessment of the marketplace. KCC previously ordered Evergy to file an integrated resource plan and the company is in the middle of a five-year rate freeze in anticipation other states raise rates to make costs in Kansas competitive.
"We will be supporting a bill to unlock the promise of energy efficiency in Kansas," Penzig said. "Kansans have long asked us for these programs, and we will begin the conversation with the Legislature on how best to do it."
Bruce Graham, chief executive officer of Kansas Electric Cooperative, said the report gave policymakers plenty to consider in terms of the economics of electric service.
"It points out there is no easy fix. There is no near-term solution to lowering the rates," he said.
Graham said the cooperative backed creation of a state energy plan and would embrace a mandate that utility companies submit detailed integrated resource plans.
Hansen, of the Kansas Municipal Utilities, the trade association for 185 community-owned electric, natural gas, water and telecommunications utilities, said the rate study showed the ability of municipal utilities to reliably and safely deliver power. The study noted, for example, municipal electric rates in Kansas increased an average of 1% per year in the past decade.
"Municipal utilities have worked hard to maintain low rates for our customers," Hansen said. "The electric utility rate study articulated the open, transparent process by which our member utilities set electric rates."
Zach Pistora, a lobbyist with the Kansas Sierra Club, said a shortcoming of the report was lack of a recommendation that the state offer incentives for expansion of alternative energy resources. Wind farms in Kansas generate 36% of the state's electricity, with coal producing 30% and natural gas providing 26%. It may not be necessary to subsidize wind, he said, but Kansas can benefit from a program that promotes installation of residential and commercial solar.
"We haven't scratched the surface when it comes to solar power," Pistora said.
Kimberly Svaty, who represents the Kansas Power Alliance, said the report reflected reality of Kansas' world-class wind resource and potential of delivering low-cost power outside the state. However, she said, Kansas should encourage investment in modernizing the state's transmission grid to keep the power highway flowing and to reduce system congestion.