Kansas regulators allow Evergy to recover costs from gas, solar projects
The Kansas Corporation Commission (KCC) has approved two settlement agreements which allow Evergy Kansas Central (EKC) to recover the cost of three new generation facilities
Last fall, the utility announced plans to build two gas plants and a solar facility. Evergy filed an application with the Commission in November, requesting a determination of how costs incurred will be recovered from customers.
The Commission noted that the application generated a “great deal of interest.” In addition to Evergy and Commission Staff, 31 parties sought and were granted the right to intervene and formally participate in the proceedings. As a result of their work, the Commission was presented with two settlement agreements for consideration: A unanimous settlement agreement regarding the solar facility, and a non-unanimous settlement agreement on the gas plants.
Evergy is proposing the new solar facility (Kansas Sky) to be located in Douglas County and owned 100% by Evergy Kansas Central, with an estimated cost of construction of $228.1 million. After review, the Commission said it determined that the unanimous settlement agreement related to Kansas Sky was
in the public interest, pointing out arguments regarding resource diversification as “compelling.” To date, very little utility-scale solar generation has been successfully developed in Kansas, and the Commission argues the profile and attributes of solar energy, if developed, would be complimentary to existing generation in the region, including wind generation.
Evergy’s gas plant proposal calls for two 710 MW combined cycle gas turbine (CCGT) plants. The Viola plant will be located near Evergy’s Viola Substation in Sumner County and is expected to operate by January 1, 2029, while the McNew plant will be built in Reno County and is expected to operate by January 1, 2030. Evergy Kansas Central and Evergy Missouri West will each have 50% ownership in the gas plants. The cost of construction to Evergy Kansas Central is estimated at $788.8 million for the Viola plant and $800.5 million for the McNew plant.
The Commission concluded that the CCGT Settlement is an “efficient and reliable plan” to add generation capacity to Evergy’s fleet. Furthermore, the Commission believes the CCGT Settlement contains sufficient safeguards and guardrails to protect customers in the event of cost overruns.
The CCGT settlement will not immediately impact rates, the Commission added. Other than the Construction Work in Progress (CWIP) rider recently authorized by the Legislature, which Evergy can begin utilizing 365 days after construction begins on each plant, no other costs will be added to rates until Evergy files a subsequent rate case.
The frequency of rate cases was also addressed by the Commission in the order.
“The Commission is troubled by the frequency and magnitude of rate cases and strongly encourages Evergy to focus on pacing investment to better align with load growth and mitigate large rate increases,” the order reads. “The Commission understands new investment is needed to support reliability and economic development in Kansas. However, affordability must be a major priority and proactively pursued as Evergy addresses a seemingly endless list of ‘justifiable’ projects and initiatives. To meet future capacity needs, for example, the Commission will expect Evergy to demonstrate its serious consideration of less capital-intensive options like demand response, utilization of surplus interconnection sites and grid-enhancing technologies.”