You know how holiday stuff is expensive when you most want to buy it, but cheaper after the holidays?
The same dynamic will soon apply to what you pay for electricity on the Missouri side of the Kansas City area.
All of Evergy’s Missouri customers will see a steep price hike for the electricity they burn during the peak demand hours of late afternoon and early evening.
It’s called time-of-use pricing and Jim Busch, the director of industry analysis at the Missouri Public Service Commission, said it makes sense.
“When you look at the overall benefits to the consumers and the company and society as a whole,” he said, “it’s a better path to go down.”
Evergy's change to the time-sensitive model comes with particularly dramatic upticks.
Electricity costs more to generate at peak times, like summer evenings when everyone’s running their air conditioners. Companies have to fire up auxiliary generators to meet that demand.
That means burning natural gas. Cranking up those gas plants costs more to kick out the same power than coal, solar, wind and nuclear.
Time-of-use rates reflect that added cost. Customers pay something closer to the actual cost to produce power at a given time — and have an incentive to use less electricity when it costs the most to produce.
Power companies already send out bills based on time-of-use rates in much of the western U.S. Evergy has allowed customers in both Missouri and Kansas to voluntarily opt-in to variable price billing for years. And the method is catching on, Busch.
But there’s something different about the time-of-use billing schedule for Missouri that Evergy customers will see this fall.
Typically, the price of electricity varies only slightly over the course of the day. Rates may go up or down one or two cents per kilowatt hour.
Some Missouri Evergy customers, on the other hand, will see rates fluctuate dramatically. Under the default plan, customers will be charged 9 cents a kilowatt hour most of the time. But the rate vaults up to 38 cents between 4 p.m. and 8 p.m. on summer evenings. That’s a 322% spike.
“That is a huge increase,” said Daniel Zimny-Schmitt at the National Renewable Energy Laboratory. “There’s no way around that.”
He said 38 cents a kilowatt hour, the top rate under Evergy’s default plan, would mark one of the most expensive residential electricity rates in the country outside of California.
The default plan —Evergy brands it “Standard Peak Saver" — is one of four options that Missouri Evergy customers can choose from by October. If you don’t do anything to your Evergy account, that’s the billing structure you’ll have.
Evergy’s alternative “Peak Reward Saver” offers a much flatter rate closer to what most households pay now. The price of electricity would rise during peak hours, but only by a penny, and then drop an additional cent from the base rate overnight.
The other two plans, tailored to people who can closely manage their energy use, feature big increases at peak times, but deeper price drops overnight.
The plans are posted onEvergy’s website, and there’s a tool to let customers compare their current bills to what they’d be under the various plans.
“We know that about 70% of our customers are actually going to see savings on their energy bill before they even do anything or make any behavior changes,” said Evergy spokesperson Kelli Kolich.
But here’s the rub. For all the savings Evergy promises for 70% of its customers, the other 30% have to pay the difference in higher rates. The rate changes aren’t designed to save all customers money overall.
They come as part of a $25 million rate increase for Kansas City area customers that the company said was necessary to offset inflation and the cost of switching to more renewable energy sources. That price hike took effect early this year.
And some of the people most likely to pay more under the new system are those who can ill afford a bigger light bill.
“I'm worried about those people,” Busch said. “I look at somebody like my mom who doesn’t own a computer” and would need help choosing the most affordable rate.
Busch said it’s vital customers need to learn as much as possible in the next three months about the new billing structure in Missouri before it takes effect. He said that’s the only way to a smart choice and then manage their electricity use accordingly. Otherwise, they could see much higher bills this fall.
Evergy also powers hundreds of thousands of homes in Kansas. But every state regulates its electric rates differently. So Evergy time-of-use rates remain voluntary in Kansas.
The utility company is asking for a rate increase in Kansas, much as it did in Missouri. But unlike Missouri regulators, the Kansas Corporation Commission is not recommending that Evergy bill all their customers under a time-of-use model.
Variable electric rates coming to Evergy customers in Missouri mean that those customers face tricky choices that used to seem as simple as flipping a switch.
“It will require consumers to definitely pay more attention to their electric usage than they've needed to in the past,” Busch said.
