Recent Case Outcomes
Evergy Kansas Central and Evergy Kansas Metro Rate cases 2023
Due to the merger between KCPL and Westar (which led to the current name of “Evergy”), the Kansas operations were under a five-year rate case moratorium. Evergy Kansas filed its first rate cases since the merger in late April 2023.
Evergy Kansas Central originally requested an on an overall jurisdictional revenue requirement base rate increase of $279 million. As a result of a settlement, the base rate increase for EKC was $148.8 million. The SGS, MGS, and lighting classes received a less than system average increase (11.28%) while all other classes saw an increase of 11.99%. This allocation reflects some incremental movement towards cost of service.
Evergy Kansas Metro originally requested an annual aggregate increase over current revenues in the amount of $25.1 million. As a result of the settlement, the base rates for EKM will decrease by $22 million applied on an equal percent basis to the classes (-3.89%).
Rates became effective Dec. 21, 2023.
Missouri American Water Company Rate case 2022
At the close of testimony prior to the hearing, the company’s case supported an increase of approximately $148 million to base rates. In a settlement resolving most issues in this case, parties won a number of significant concessions and agreed to a revenue requirement increase of $95 million (an approximately 35% reduction from MAWC’s request). The Company also agreed to drop several of the cost “trackers” and “revenue stabilization mechanisms” as well as its attempt to recover discrete cost adjustments (increases) outside of the test-year.
These stipulations represented significant savings for customers in every rate class compared to the company’s request. In addition, because the WSIRA was reset to zero - in both districts - Rate J industrial customers saw an effective decrease to their bills.
Rates became effective May 28, 2023.
Spire Missouri East and Spire Missouri West Gas Rate cases 2022
Spire filed for a rate increase on April 2, 2022. In Spire’s last case, the Commission made two decisions that Spire found to be offensive. Specifically, the Commission: (1) included some short-term debt in Spire’s capital structure and (2) disallowed a portion of Spire’s capitalized overhead costs. Those issues, plus Spire’s requested return on equity were once again issues in this case where Spire sought to increase base rates by $151.9 million.
Parties were able to reach an agreement to reduce the increase to $78 million - a reduction of $73.9 million from the company’s filing – nearly 50%. In addition, transportation class customers saw no increase over current rates. The current ISRS charge was reset to zero with that amount added to your customer charges.
Rates became effective on Dec. 26, 2022.
Evergy Missouri Metro and Evergy Missouri West Electric Rate cases 2022
On January 7, 2022, Evergy filed its rate increase cases for both its Evergy Metro (KCPL) and Evergy West (GMO) service areas. For the Metro service area, Evergy sought an overall increase of 5.65%. For its West service, Evergy is sought an overall increase of 8.31%.
MECG’s efforts in this case were three-fold: (1) reduce the overall increase (the regulatory short-hand is “revenue requirement”); (2) fight to make sure that Industrial customers aren’t bearing an undue portion of those costs (“cost of service” and “revenue allocation”) and (3) examine appropriate rate design.
Through MECG’s efforts in this case, several disputed issues were resolved by stipulation and agreements among the parties. This includes a class revenue allocation settlement that addresses the residential subsidy by assigning less of the increase to commercial and industrial customers – a significant win for MECG supporters. In addition, parties reached a partial revenue requirement stipulation that reduced the overall increase in this case.
In Evergy West SPS and LGS customers say a 2.86% increase and LP customers saw a 1.89% increase. For Evergy Metro SGS, MGS, LGS, and LP customer classes all saw a 2.23% increase.
We initially expected rates to become effective on Dec. 6, 2022.
Due to re-hearings and compliance tariff issues, the new rates became effective on Jan. 9, 2023.
Ameren Missouri Electric Rate Case 2023
Ameren Missouri filed its electric rate increase case seeking to increase base rates by approximately $316 million (11.6%). Stakeholders were able to reach an agreement on the revenue requirement (the overall rate increase). The increase was $140 million (a reduction of $176 million from the company’s initial request). Parties remained at odds over the Class cost of service and rate design issues, and so, we held the evidentiary hearing on those topics. These issues relate to the appropriate allocation of any increase to the different customer classes and how the increase would be applied to the bill components (i.e. demand charges or energy charges).
The Commissioners’ final decision was to allocate the rate increase on an equal percent basis among the customer classes. When considering the revenue requirement settlement mentioned above this means the increase to customers rates was approximately 5.2%.
For rate design, the Commission decided not to make changes in this case but pledged to open a separate case file where stakeholders will evaluate future rate designs. MECG is participating in that docket.
Rates became effective July 1, 2023.
2019 Legislative Session
On May 17, the General Assembly finished its 2019 legislative session. MECG was active on several fronts. MECG actively supported two initiatives. First, MECG was active in supporting Senator Libla's resolution (SJR25) designed to allow Missouri voters to decide whether to implement electric competition. Electric markets have been opened to competition, to varying degrees, in 20 different states. Statistics have shown that rates have increased much slower in states that have introduced electric competition. Missouri's industrial electric rates have increased 70.2% since 2006. In contrast, industrial rates in all of the competitive states have increased much slower and some states have actually experienced rate reductions in that time period. Importantly, as Missouri's industrial rates have become uncompetitive companies and jobs have left Missouri. Specifically, KCPL admits that, since 2006, it has lost 17% of its industrial customer base. Second, MECG supported securitization legislation (HB935 and SB289). This legislation, already implemented in approximately 22 states, provides a mechanism for reducing customer impacts for investment stranded as a result of natural disaster, retail competition or economics. Relative to Missouri, this mechanism could significant reduce the impact to customers associated with utility retirement of coal plants rendered uneconomic due to low gas costs or the low cost of renewable generation. While neither piece of legislation passed the General Assembly, each moved further than they did in 2018.
MECG actively opposed legislation introduced by gas and water utilities to radically change the manner in which the Public Service Commission set rates for gas and water utilities. Gas legislation (SB13) would introduce formula rates. Recognizing that gas rates have been relatively stable for 10 years, customers are skeptical of the benefits of such legislation. Water legislation (HB633 and SB377) would greatly expand the scope, both geographically and in terms of the costs included, of the current water ISRS statute. I have termed this legislation "ISRS on steroids". Effectively, water utilities would pass more costs through the ISRS without any consideration of offsetting cost decreases or revenue increases. These utility bills were either withdrawn or failed to pass the House of Senate chambers.
Legislation that passed included bills related to electric vehicle charging stations (declared that non-utility charging stations did not result in those companies becoming public utilities); Commission advisory staff (create a 6 person Commission advisory staff to assist the Commissioners on utility regulation matters); procedure for appealing Commission decisions and local taxation of wind farms.
2018 Westar Kansas Rate Case - effective September 27, 2018
On February 1, 2018, Westar filed for a two phase rate change. First, a rate reduction of $1.6 million which accounts for the vast majority of the changes in costs / expenses / investment. This rate reduction is primarily a result of the going-forward implications of the federal tax change. Westar proposed that this reduction would become effective in September 2018. Second, Westar proposed a rate increase of 2.6% in January 2019. This is the result of an expiring wholesale contract with MKEC. The rates are based upon an ROE of 9.85% applied to a capital structure consisting of 51.6% equity and 48.4% long term debt.
On July 17, 2018, the parties agreed to a rate reduction of $68 million. This significant shift is a result of the implementation of certain merger commitments as well as the effects of the federal corporate income tax reduction. The settlement also provides for certain rate design changes that will be beneficial to high load factor commercial and industrial customers in the MGS, LGS and ILP rate schedules. Specifically, the rate reduction will be implemented entirely by reducing the energy charge. On September 27, 2018, the Kansas Commission approved the settlement.
On May 1, 2018, KCPL filed for a $26.2 million (4.53%) rate increase. The rate increase is depressed in that it includes the effects of the reduction in the federal corporate income tax rate. Absent the reduction in income tax rate, KCPL would be seeking an increase of approximately 9%. On September 12, the other parties filed testimony in this matter with Staff recommending an increase of only $5.55 million (0.96%). On October 12, the parties reached a settlement that provides for a rate reduction of $3.9 million (-0.68%). Furthermore, while the residential class received a reduction of -0.34%, the large commercial and industrial classes received a reduction of -1.00%. On December 13, the Kansas Commission approved the settlement effective on December 20, 2018.
2018 KCPL Missouri Rate Case - effective December 6, 2018
On January 30, 2018, KCPL filed to increase Missouri rates by $16.4 million (1.88%) based upon a return on equity of 9.85%. KCPL proposed to include the lower federal corporate tax rate of 21% , but sought to utilize the tax benefits for the stub period (January 1, 2018 through the effective date of rates) as an offset to alleged under-earnings experienced in 2018. On September 27, 2018, the parties executed settlements that resolved this case. Specifically, the parties agreed to a rate reduction of $21 million (2.39%). Importantly to large commercial and industrial customers, we were able to get some recognition of the residential subsidy. Specifically, while residential customers received a rate reduction of 1.43%, Large Power and Large General Service customers received a rate reduction over twice as large at 2.99%. Moreover, the LGS and LP rate decrease was implemented by reducing all energy blocks and leaving demand and customer charges at current levels. This should help to address subsidies within the LGS and LP rate schedules. Finally, the stub period tax benefits of $38.7 million were applied against regulatory assets. This should have the effect of reducing future rate increases. On November 26, the Commission approved the settlements with rates to become effective on December 6.
2018 GMO Rate Case - effective December 6, 2018
On January 30, 2018, GMO filed to increase rates by $19.3 million (2.61%) based upon a return on equity of 9.85%. GMO proposed to include the lower federal corporate tax rate of 21% , but sought to utilize the tax benefits for the stub period (January 1, 2018 through the effective date of rates) as an offset to alleged under-earnings experienced in 2018. On September 27, 2018, the parties executed settlements that resolved this case. Specifically, the parties agreed to a rate reduction of $24 million (3.22%). This decrease was allocated equally to all rate classes. The LGS and LP rate decrease was implemented by reducing all energy blocks and leaving demand and customer charges at current levels. Finally, the stub period tax benefits of $29.3 million were returned to customers through a one-time bill credit. $6.8 million was credited to the LP rate class and $4.7 million returned to the LGS rate class. Amounts within the class were credited to customers on the basis of relative energy usage. On November 26, the Commission approved the settlements with rates to become effective on December 6, 2018.
2017 Ameren Rate Case - effective April 1, 2017
On July 1, 2016, Ameren filed to increase rates by $206.4 million (7.8%). On February 23, 2017, the parties filed a settlement providing for an increase of $92.0 million (3.5%). Furthermore, in an effort to reduce rate subsidies, residential rates were increased 3.7%, while Large General Service customers received an increase of only 3.0%. Finally, in order to better align rates with costs, a larger portion of the Large General Service and Large Primary rate increases were collected through demand charges, rather than energy charges. This benefits higher load factor commercial and industrial customers.
2017 Ameren Rate Case - effective April 1, 2017
On July 1, 2016, Ameren filed to increase rates by $206.4 million (7.8%). On February 23, 2017, the parties filed a settlement providing for an increase of $92.0 million (3.5%). Furthermore, in an effort to reduce rate subsidies, residential rates were increased 3.7%, while Large General Service customers received an increase of only 3.0%. Finally, in order to better align rates with costs, a larger portion of the Large General Service and Large Primary rate increases were collected through demand charges, rather than energy charges. This benefits higher load factor commercial and industrial customers.
Great Plains Energy / Westar Merger
On May 29, 2016, Great Plains Energy (the parent company of KCPL and KCP&L-GMO) announced the acquisition of Westar Energy. On May 31, 2016, the CEO for Great Plains Energy notified the Commission of the merger and announced that Missouri approval of the merger was not required. On October 11, 2016, MECG filed a Complaint against Great Plains alleging that Great Plains had violated a 2001 stipulation by failing to seek Commission approval for the Westar acquisition. On February 22, 2017, the Commission issued its Report and Order agreeing with MECG's Complaint and finding that Great Plains was required to seek Commission approval of the acquisition of Westar.
2017 GMO Rate Case - effective February 22, 2017
On February 23, 2016, GMO filed to increase electric rates by $59.3 million (8.17%). In addition, GMO sought to merge its MPS and Light & Power rate districts. On September 20, 2016, the parties filed a settlement that provided for an increase of $3.0 million (0.41%). In addition, the settlement provided for the consolidation of the MPS and L&P rate districts. In order to mitigate any impacts to customers associated with consolidating the rate districts, the settlement provided for mitigation credits so that no customer would experience an increase in excess of 5.0%. The rate increase went into effect on February 22, 2017.
2017 Empire District Electric rate case - effective September 14, 2016
On October 16, 2015, Empire filed for a $33.4 million (7.28%) electric rate increase. On June 20, 2016, the parties filed a settlement providing for an increase of $20.39 million (4.36%). Moreover, in an effort to reduce rate subsidies, rates for the Large Power class were increased only 3.88%. Finally, in order to better align rates with costs, the entirety of the Large Power rate increase was collected through the demand charge. This benefits higher load factor commercial and industrial customers.