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PSC approves liability fund despite Evergy’s protestations

   

JEFFERSON CITY, Mo. — Evergy will need to set up a regulatory liability account for revenue and returns from a coal plant it is shuttering, the Public Service Commission (PSC) said in a contentious order Thursday morning. 

The plant, located in Sibley, is operated by Kansas City Power and Light Company (KCP&L) Greater Missouri Operations (GMO). As KCP&L merged with Westar Energy, the plant falls under the Evergy umbrella. 

Given the costs associated with maintaining the old coal plant, Evergy decided to retire it even though it was still operational. The plant is now fully retired, but Evergy is still in the process of decommissioning it. 

The order requires Evergy to collect revenue associated with the plant and hold it in a liability fund. What to do with that money will be decided in a future rate case, commissioners said. 

Officials, on the other hand, had warned the accounting authority order would deter investors in Missouri and have financial ramifications on Evergy. 

Commissioners approved the order 4-1 with Bill Kenney as the lone dissenting vote. 

PSC Chairman Ryan Silvey pointed to the company’s previous stipulation and agreement, noting it had allowed for such an order to occur. He also said approval of the order does not mean the commission is waffling in its support for renewable energy or will deter future utilities from retiring economically inefficient coal plants. 

“In their previous stipulation, they agreed to this process. This is not a surprise. This is something that was contemplated by all the parties and signed off on by the company in their last stipulation and agreement,” Silvey said. 

Kenney, however, said the company made a decision that was in the best interest of ratepayers and predicted the order would bring a negative financial impact on Evergy. 

“The company followed the rules. I think retirements are going to be the norm as we go forward, and personally I believe the company was prudent to retire those units,” Kenney said.

Evergy’s stock closed at 63.58 Wednesday — down about 0.49 percent on the day. It closed at 65.01 on Oct. 8, the day before the PSC indicated support for the order in a public discussion. 

By Thursday afternoon, it was around 63.27.

“From an accounting perspective, it will be an immediate hit to our earnings with no expectation that we’ll ultimately be able to collect that money,” Chuck Caisley, an Evergy senior vice president, told The Missouri Times ahead of the vote.  

“I think it’s very likely we could see less investment in this part of our jurisdiction at a time when we’re hoping to ramp up investment — particularly in things like renewables.” 

Prior to the vote, Commissioner Daniel Hall suggested some legal uncertainty regarding just what a utility can recover that will likely be brought up at future rate cases. He called for a legislative fix to avoid future confusion and problems: securitization to allow utilities to recover investments if it’s then reinvested in renewables, transmission, or modernization. 

Commissioner Maida Coleman had indicated she wouldn’t support the order during the discussion last week but voted in favor of it Thursday morning during the agenda meeting. PSC Staff, normally at odds with utilities, had also disagreed with the order. 

PSC case could hurt stocks, lead to less investment in Missouri, Evergy warns