WICHITA, Kansas — For the Boys and Girls Club of Topeka, $25,000. For the Ellis Foundation — giving out scholarships to kids in the Fort Scott area — $120,000. For the naming rights at Naftzger Park in downtown Wichita, $1.4 million.
Those are just a few examples that monopoly utilities in Kansas choose to bless with donations, essentially, from you. But consumer advocates say that form of corporate giving is often linked with political agendas and that making captive customers pay for it is problematic.
In Kansas, regulators may only reject up to half of utility dues, donations and charitable contributions from being passed on to customers. And that’s only a may. If utilities want, they could argue to pass on the entire cost.
“We only grow as a company if the customers that we serve thrive and that the regions that we serve grow and thrive,” said Chuck Caisley, Evergy’s lobbyist and government relations officer.
He said the company is proud of the ways it serves the community. In 2020, it made about $8 million dollars in charitable contributions.
Regulators seem to appreciate the donations, too. One of the stipulations of the merger agreement that created Evergy was that it had to keep its Kansas charitable contributions at the same level for at least five years.
Caisley said they’ve not only met, but exceeded that expectation.
Other large utilities like Kansas Gas Service also give millions away in charity each year.
The money goes to all sorts of organizations, from sponsoring community concert series and events like Juneteenth celebrations to giving to organizations like the United Way.
While utilities aren’t allowed to pass the money they spend on advertising and lobbying on to customers, they can pass on the dues they pay to join industry groups such as the American Gas Association.
Dues paid to local and state chambers of commerce can also be passed on to customers. Those groups lobby extensively and count the state’s largest industries and manufacturers as members.
Ultimately, which dues and donations get included in customer rates is decided during a process known as a rate case. Since Evergy was formed in 2018, it hasn’t had one.
Caisley said when the company goes to regulators with a rate case for the first time in 2023, he doesn’t expect that Evergy will ask to recover any charitable donations from customers, including the $1.4 million it spent on Naftzger Park.
“Purely charitable giving is something that is appropriately a shareholder expense,” he said.
But that’s not common practice and there will be little way to know if that’s actually what Evergy does. Itemized data on the dues and charitable contributions utilities include in rates isn’t publicly available. That’s mostly because the utilities have asked for it to be kept confidential.
“We don’t want organizations to feel relatively better or relatively worse with respect to what we give to different organizations,” Caisely said.
That policy doesn’t sit well with everyone.
“We need to make sure that our ratemaking process is as transparent as possible,” said David Nickel, an attorney at the Citizens’ Utility Ratepayer Board. It’s a state agency that’s supposed to represent small ratepayers in cases before the Kansas Corporation Commission.
The group believes that if the spending doesn’t benefit ratepayers, then they shouldn’t have to pay for it. It recently tried, and failed, to get the dues that Atmos Energy paid to the American Gas Association removed from customer rates.
Nickel said, in the end, determining whether donations or dues benefit the ratepayer is difficult. There’s no easy yes or no answer.
“How do you really determine how much of those dues really are related to lobbying or not?” he said.
Research shows political ties often go along with corporate giving.
Marianne Bertrand, an economics professor at the University of Chicago, found that large companies in the U.S. often use charitable donations to nurture influence with regulators and lawmakers.
“It raises less reputational risks than being the biggest lobbyist spender or the biggest PAC spender,” she said.
In separate research, the Energy and Policy Institute found several examples in other states of utilities giving to a civic group or church that later wrote op-eds or testified in support of plans to raise rates or pass utility friendly regulations.
“If a utility is giving a million dollars away to groups as part of an effort to raise rates by a billion dollars, I’m not sure that’s very charitable,” said David Pomerantz, the executive director of the Energy and Policy Institute.
He said it’s tempting for utilities to mix up their charity work with their political agenda, because as government-regulated monopolies, their entire business model hinges on gaining favor with regulators.
In one document posted online, Evergy admits as much about their own corporate giving strategy. It reads, “Our strategy centers on making innovative community investments in the areas of environmental leadership and community vitality while also aligning with the needs of our communities and our corporate business strategy.”
“If it’s charity, it shouldn’t matter if it aligns with the needs of your corporate business strategy,” Pomerantz said. “That’s not charity, that’s something else entirely.”
The complicated ties between monopoly utility companies and local governments show up in other ways too.
Consider a mayoral press briefing held last June in front of the landmark Keeper of the Plains sculpture. It’s located on the Arkansas River in Wichita and is surrounded by gas firepots. Mayor Brandon Whipple began the press conference by praising Kansas Gas Service.
“We wanted to highlight this morning the amazing partnership we have with Kansas Gas to make the Keeper fire pots a little more sustainable and affordable,” he said.
He then passed the mic to Lauren Clary, the company’s community relations manager.
“Kansas Gas Service donated this signage to help educate visitors about the significance of fire to Native American culture,” Clary said. “And how the Keeper’s ring of fire is fueled by clean-burning natural gas.”
So now, when you visit the Keeper of the Plains, you’ll also see a sign that promotes Kansas Gas Service’s agenda that natural gas is a clean energy option — even though it’s a significant contributor to global warming.
Pomerantz said too many examples exist of regulated utilities in other states using charitable contributions for less than altruistic reasons for Kansans to continue to foot the bill.
He said state regulators should follow the lead of several other states that have already outlawed utilities from using captive customers to help pay for dues, donations or charitable giving.
“If customers want to give their money away to charity, they can do that themselves,” Pomerantz said. “If (utilities) want to help the community, they can do it by lowering rates, which helps everybody.”
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.
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