© 2024 Kansas City Public Radio
NPR in Kansas City
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

Kansas City residents are seeing enormous energy and gas bills. Here's how utility rates get set

A winter storm cut power to thousands of Evergy customers on Jan. 9, 2024.
Carlos Moreno
KCUR 89.3
A winter storm cut power to thousands of Evergy customers on Jan. 9, 2024.

After an especially cold month, Kansas City residents can expect energy and gas bills sometimes topping $200. Utilities like Evergy, Spire and Ameren need approval on their rates from regulators in Missouri and Kansas.

January kicked off with bone-chilling, pipe-bursting temperatures.

By the end of the month, Kansas City residents can expect energy bills, many topping $200, extending their wintertime misery.

Those energy bills — ranking among the most expensive in the country — come approved by regulators in both states.

If your bill feels outrageous, your gripe sits with the public utility board in Kansas or Missouri that tells companies like Evergy how much they can charge and when they can cut off your service.

Unlike most grocery chains or cellphone companies, Evergy faces no competition. Just regulators.

The system of energy and natural-gas monopolies goes back more than a century. In Kansas and Missouri, public utility commissions serve as watchdogs to prevent price gouging and exploitation. Some groups want the commissions to fight harder for customers.

Here’s how these energy regulators work, why they exist and how you can get involved.

How Evergy got a monopoly on Kansas City’s electricity

When electricity first became widely available in the early 20th century, a tangled web of power lines took over American cities.

At the time, electric companies had to compete for customers and each company had to construct its own infrastructure — which created a redundant mess of substations and power lines.

Some cities responded by creating public utilities where a government body, such as the Board of Public Utilities in Kansas City, Kansas, maintains the energy grid and sells electricity to its residents. Any profit is reinvested in the utility, rather than going to shareholders.

Everywhere else, electricity companies became regulated monopolies.

Electricity infrastructure located at 61st Street and Troost Avenue. Evergy maintains the power grid in Kansas City, Missouri, and answers to the Missouri Public Service Commission.
Josh Merchant
Kansas City Beacon
Electricity infrastructure located at 61st Street and Troost Avenue. Evergy maintains the power grid in Kansas City, Missouri, and answers to the Missouri Public Service Commission.

Regulators promised companies protection from competition. They promise consumers that those monopolies won’t exploit them.

So only one energy company serves Kansas City and, in exchange, a government commission regulates it more heavily to keep the power company from exploiting the lack of competition.

That’s where the Missouri Public Service Commission, or MPSC, and the Kansas Corporation Commission, or KCC, come in.

“Absent that competition, you’ve got oversight,” said Geoff Marke, the chief economist for the Missouri Office of the Public Counsel, which advocates for utility customers before the MPSC.

The commissions take a close look at utility company finances to, ostensibly, make sure that they’re not overcharging customers or making foolish buys that ratepayers might get stuck with.

They also set standards to make sure that power plants work in extreme weather. During the 2021 winter storm in Texas, for instance, a lack of winterization requirements led to the failure of natural gas and coal plants and wind turbines when ratepayers needed heat the most.

How the government regulates electricity companies and energy bills

Members of both the MPSC and KCC are appointed by the governor of each state. The MPSC has five commissioners, and the KCC has three. Similar to a court, the commissions hold hearings and issue rulings.

They rely heavily on their staffs to make sense of the complicated finances of large companies that promise to provide telecommunications, natural gas, electricity or power to consumers on a large scale. Each commission employs 150 to 200 people.

Most commonly, the commissions make headlines when they approve or reject changes to electricity rates and energy bills.

Last November, Evergy requested an increase of nearly 10% in rates for customers in central Kansas, but the KCC told Evergy it could only increase rates by 3.5%. Evergy’s time-of-use rates in Missouri — intended to reflect when electricity is in greatest demand and most expensive to produce — came only with permission from the MPSC.

The commissions also decide how much companies like Evergy can, or must, shift from fossil fuels like coal to less reliable but more sustainable sources like wind and solar. They also direct utilities on how much to spend on maintaining the power grid or on building new power plants.

They track the frequency and duration of outages — and might require power companies to issue credits to customers if outages run unusually long.

If a power company makes an unwise investment, they are supposed to make sure that the shareholders, rather than the customers’ energy bills, take on that cost.

For example, Ameren constructed a wind farm near Kirksville, Missouri, in 2018. But when bats died from flying into turbines, it had to be shut down at certain times to meet federal regulations.

Three years later, Ameren requested a rate increase to pay for the wind farm, but the Office of the Public Counsel argued that because the farm wasn’t operating at capacity, the costs should be paid by shareholders rather than customers.

Some groups push for tighter regulation

A coal-fired power plant in Lawrence, Kansas.
Brian Grimmett
Kansas News Service
Evergy's coal-fired power plant in Lawrence, Kansas.

Every year, Evergy and other utility companies must submit plans to the KCC and the MPSC spelling out where they see demand headed over the next 20 years — and how they plan to meet it.

“What would happen if we got a lot more people that were driving electric cars, for example?” Marke said. “How can we meet that load?”

The utilities’ plans for meeting demand might also predict scenarios like hotter heat waves or colder deep freezes to see if the energy grid is prepared for strain.

In 2021, Evergy proposed its electricity be carbon-neutral by 2045 and promised to retire a coal plant near Lawrence by the end of 2023.

Evergy has since backpedaled on its renewable energy promises and pushed the retirement of the Lawrence coal plant back to 2028.

Ty Gorman, the Kansas field organizer for the Sierra Club, pays close attention to the workings of the KCC and hopes the commission will be more critical of utilities’ plans and use more discretion in what it approves.

“As long as Evergy submits a plan … they check that box that it is technically ‘a plan,’” Gorman said. “Partially because the KCC is not well enough funded and staffed, in my opinion, they aren’t holding Evergy accountable for making the best plan for Kansas.”

From a lobbying perspective, Gorman said, environmental advocates in Missouri and Kansas have an uphill battle against investor-owned utilities like Evergy, Spire and Ameren.

In Missouri, energy companies collectively made up a third of total lobbying expenditures in 2019 and 2020 — about $20,000 out of $59,000. Evergy and Spire have contributed thousands of dollars worth of Kansas City Chiefs tickets to the Kansas City mayor and members of the City Council over the past five years.

“They’re regulated monopolies, so they want to control the circumstances of their regulation as much as possible,” Gorman said.

How to attend commission meetings

Kansas Corporation Commission

Business meetings happen every Tuesday and Thursday at 10 a.m. in the first-floor hearing room at 1500 S.W. Arrowhead Road in Topeka.

These meetings are also streamed live on its YouTube channel.

Missouri Public Service Commission

The MPSC does not hold regular business meetings, but its upcoming hearings can be found on its website.

Those meetings are often held remotely, over WebEx. Information about how to join can be found on the meeting agenda and recordings of past meetings can be found in the MPSC archive.

This story was originally published by the Kansas City Beacon, a fellow member of the KC Media Collective.

Josh Merchant is The Kansas City Beacon's local government reporter.
KCUR serves the Kansas City region with breaking news and award-winning podcasts.
Your donation helps keep nonprofit journalism free and available for everyone.