Senate Committee on Utilities 01/15/2026

Utilities Day 2: Bill Introductions and KCC Update

Introduction of New Bills

• The session begins with a welcome from the chair, inviting requests for bill introductions.

• Senator Thompson introduces several bills, including 26RS 2977, aimed at requiring NEAI data centers to use closed-loop cooling systems to conserve water in drought-prone Kansas.

• Another bill introduced is 25RS 0296, which mandates county approval for wind and solar leases, ensuring residents are notified before execution.

• A third bill, 25RS 0323, sets decommissioning requirements for industrial-scale wind and solar facilities.

Presentation by Kansas Corporation Commission (KCC)

• Justin Grady, Director of Utilities at KCC, presents an update on electric rate affordability and competitiveness.

• He mentions that he will condense his presentation time to about 35–40 minutes to allow for questions afterward.

Electric Rate Overview

• Grady provides an agenda slide outlining the topics covered in the presentation without reading every detail. His contact information is available for follow-up questions.

• He discusses electric rate affordability using year-end EIA data compiled over five or six years. This includes all-in electric rates encompassing surcharges and fuel clauses.

Current Electric Rates in Kansas

• Kansas's all-in electric rates are currently 15% below the national average; however, they remain 7.53% higher than the regional average despite a total increase of approximately 9.72% over ten years.

Residential Customer Insights

• The presentation shifts focus to residential customers' monthly bills compared across states; Kansas ranks sixth highest among tracked states but remains lower than both regional and national averages by about $18 per month.

Consumption vs. Rates Analysis

• Data is presented showing average monthly consumption against average rates; this highlights a correlation between high usage and high rates except for Texas, which has both high metrics leading to the highest regional electric bills.

Utility Rate Calculations and Their Implications

Understanding Utility Rate Structures

• Utility rates are calculated based on a cost of service model, where many costs are fixed. This means that as the number of billing determinants increases, the overall rate calculation decreases.

• States like Minnesota and Colorado have higher electric rates (15 cents), but their average bills may be lower than those in Kansas due to different consumption patterns.

• In states such as Oklahoma and Arkansas, customers use more electricity per capita, resulting in lower rates compared to states like Missouri, South Dakota, and Kansas.

• The relationship between utility rates and average monthly bills remains consistent over time, as reported by the EIA.

Trends in Kansas Electric Bills

• Evergy is the dominant electric utility in Kansas, serving over a million customers. Average residential monthly bills for Evergy have increased by 12.69% over the last decade.

• The increase in average bills correlates with natural gas price spikes leading up to significant geopolitical events like Russia's invasion of Ukraine.

Updates on Major KCC Dockets

Evergy's Large Load Power Service Docket

• A new tariff has been introduced for large customers requiring 75 megawatts or more of demand. This is inspired by data center needs but applies broadly to any large customer.

• Key dates related to this docket include filing dates and evidentiary hearings; links to documents are available for further reading.

Customer Protections Under New Tariff

• The tariff includes exceptions prioritizing advanced manufacturing facilities over data centers when capacity conflicts arise.

• Customers under this tariff will sign long-term contracts (12 years minimum), often extending to 16 or 17 years with optional load ramp periods of four to five years.

• Contracts are structured as "take or pay," meaning customers must pay for their contracted capacity regardless of actual usage during the contract term.

Understanding the Large Load Power Service Tariff

Key Components of the Tariff

• The tariff is designed for customers with a demand of 400 megawatts, incorporating protective measures for these customers, including termination provisions requiring 36 months' notice before contract termination.

• Customers must meet stringent collateral and creditworthiness standards. They will also incur all riders and surcharges applicable to industrial customers, including a newly created cost stabilization rider that counteracts the economic development rider.

Economic Development Considerations

• Larger customers (over 25 megawatts) can benefit from significant reductions on their power bills for up to ten years; however, bringing in customers over 75 megawatts may necessitate building new power plants.

• Smaller industrial customers can still access economic development riders, while larger facilities (75 megawatts or more) will either need special contracts for discounts or fall under a tariff where they pay higher rates.

Rate Structure Insights

• The tariff emphasizes fixed cost recovery with demand rates significantly higher than standard industrial tariffs—about 50% more—indicating a shift towards demand-based pricing rather than energy-based pricing.

• Overall base rates are projected to be 16% to 19% higher than those of regular industrial customers due to minimum bill provisions based on contracted demand levels.

Customer Protective Features

• Large customers could face annual power bills around $200 million but will sign long-term contracts ensuring revenue stability through minimum bill and termination provisions.

• The tariff's design involved collaboration among various Kansas Energy stakeholders, integrating unique elements not found in other tariffs across the country.

Optional Riders and Regulatory Framework

• Pages discussing optional riders allow large customers specific preferences regarding carbon-free energy sources or new nuclear plants while maintaining KCC regulatory authority over these agreements.

• These riders serve as conceptual frameworks enabling Evergy to offer tailored electricity services without losing regulatory oversight from the KCC.

Policy Considerations for Data Centers

• There is an ongoing debate about whether data centers should be served by regulated versus unregulated utilities, highlighting varying local perspectives on this issue.

Data Centers and Customer Rates in Kansas

Long-Term Contracts and Customer Protection

• The speaker argues that long-term contracts with strict protections for existing customers can lead to lower rates for residential and non-data center customers, suggesting a competitive advantage for Kansas.

Self-Generation and Grid Reliability

• Evergy has clarified that customers can self-generate power without KCC permission, but there is limited interest in this option due to the high costs and challenges of maintaining reliability independently.

• Achieving the reliability expected by data center customers through self-generation is difficult; even top-tier power plants require maintenance outages, highlighting the value of grid reliability built over a century.

Bring Your Own Generation Initiatives

• There are provisions for "bring your own generation" within alternative riders. For instance, Meta's investment in advanced nuclear reactors could be integrated into Evergy’s service area if they choose to fund it.

Tariff Limitations

• The proposed tariff specifically addresses two large investor-owned utilities in Kansas, excluding municipal or cooperative entities from its scope.

• This tariff does not override local opposition nor serve as an incentive program; instead, it establishes fair ground rules for data centers seeking electric service from Evergy.

Recent Developments in Energy Infrastructure

• On November 6th, 2024, Evergy filed a request with KCC to build two combined cycle generating facilities. These projects aim to enhance energy infrastructure while ensuring compliance with regulatory standards.

• A solar facility project received unanimous support among stakeholders due to its potential to improve system reliability and represent a sound economic investment for Evergy's customer base.

Rate Case Updates

• In late September 2023, a settlement agreement was reached regarding Evergy's rate case. Initially requesting $192 million (8.64% increase), the final agreed amount was $128 million (6.6% increase), reflecting real infrastructure investments rather than general inflationary costs.

• The approved rate increase translates roughly to an additional $8.47 per month on residential bills, emphasizing tangible improvements made by Evergy over recent months aimed at enhancing service reliability and supporting economic development initiatives.

Overview of the 2025 Integrated Transmission Plan

Introduction to the Southwest Power Pool (SPP)

• The CEO of the Southwest Power Pool is scheduled to present to the committee next Tuesday, prompting a discussion on streamlining presentation time.

• SPP is a regional transmission organization regulated by FERC, required to evaluate its transmission system annually and conduct a 10-year forward look based on various factors like load changes and generator locations.

Initial Transmission Plans

• The original proposal for new regional transmission was estimated at $18.1 billion, primarily targeting southern regions including Oklahoma, Texas, New Mexico, and Louisiana with a focus on a 765KV overlay.

Stakeholder Involvement and Adjustments

• Significant involvement from energy stakeholders occurred due to unfavorable benefit-cost ratios for Kansas; multiple discussions were held in Little Rock with senior leadership.

• Ultimately approved was an $8.5 billion portfolio focused on essential projects for reliability rather than economic ones; larger projects were deferred for further evaluation.

Benefit-Cost Analysis Insights

• The deferred $10 billion transmission plan may be revisited as part of an overarching regional strategy involving the 765KV overlay.

• Slides 30 to 34 contain detailed benefit-cost analyses showing improved ratios for Kansas after project adjustments.

Load Forecasting Challenges

Understanding Load Growth Projections

• Slide 28 presents complex data illustrating load forecasts from all entities within SPP; initial projections indicated around 2 gigawatts of growth over ten years.

• By contrast, subsequent forecasts showed significant increases: one-year projections rose from 58 gigawatts in 2024 ITP to 61 gigawatts in the following year.

Reliability Concerns

• There are concerns about building infrastructure based on long-term forecasts that may not materialize; confidence diminishes beyond immediate future predictions (2030).

Short-Term Demand Certainty

• Utilities have reliable short-term demand insights due to construction timelines for power plants and facilities; significant load growth is anticipated between now and 2030.

Reliability Standards Discussion

Urgency of Authorizing Plans

• A presentation highlighted that failure to authorize the integrated transmission plan by 2034 could lead to extreme reliability issues—114 days per year of load shedding compared to FERC's standard of one day every ten years.

Resource Adequacy Update

• Ongoing evaluations regarding reliability standards have intensified post-Winter Storm Uri, focusing on both traditional thermal generators and renewable sources.

Planning Reserve Margin and Reliability Challenges

Overview of Planning Reserve Margin (PRM)

• The reliability perspective of energy resources is not as strong as previously thought, prompting increases in the planning reserve margin to ensure sufficient capacity during peak demand.

• The PRM has increased from 12% to 15% in 2023, with a further increase to 16% expected this summer. It will rise again to 17% by winter 2029, after which it may stabilize until newer facilities improve reliability.

Future Projections and Improvements

• By 2032, the planning reserve margin is anticipated to return to levels seen in 2016 due to the introduction of more reliable thermal generating facilities and co-located battery systems enhancing resource reliability.

• An expedited resource adequacy study process was initiated by SPP, allowing utilities to address generation interconnection challenges and meet upcoming PRM requirements effectively.

Transmission Facility Developments

• Discussion on the Buffalo Flats to Delaware transmission facility, a proposed 133-mile line currently under review by KCC, aimed at improving system reliability.

• Public hearings have been conducted regarding landowner concerns about the proposed route through several counties; engineers are actively addressing these issues.

Addressing Reliability Issues

• The new transmission line aims to mitigate severe reliability challenges experienced during winter storm Elliott on Christmas Eve in 2022, where outages affected parts of the Eastern Interconnect but not SPP.

• Specific voltage and overload issues were identified during winter storm Elliott; while most areas avoided outages, some regions had load shedding due to these challenges.

Upcoming Projects and Rate Cases

• Another significant project mentioned is the Sydney to Holcomb line being constructed by Sunflower, designed similarly to prevent transmission-related reliability issues observed during previous storms.

• A recent base rate case filed by Empire District Electric Company seeks a substantial increase that has raised concerns among regulators regarding its impact on economically disadvantaged customers.

Conclusion

• The requested base rate increase poses a significant financial burden for many Kansas residents; efforts are underway from regulatory bodies to ensure fair pricing while maintaining system reliability.

Understanding Capacity Figures in Energy Planning

Overview of Capacity Numbers

• The discussion begins with a question about the relevance of online capacity figures, indicating that the answer is complex and not straightforward.

• There are two types of capacity figures: Installed Capacity (ICAP) and Accredited Capacity (ACAP). ACAP is significantly smaller than ICAP, which can lead to confusion regarding actual utility obligations.

Seasonal Demand Variations

• A notable difference exists between summer and winter peak demands in Kansas, with summer peaking at 56 gigawatts and winter at approximately 47 gigawatts. This discrepancy influences utility planning.

• The planning reserve margin (PRM) requirements for Kansas Utilities have impacted decisions on coal retirements and the integration of renewable energy sources, emphasizing reliability during winter months.

Questions on Energy Sources and Data Centers

Inquiry into Nebraska's Data

• Senator Cleves raises questions about Nebraska's absence from data reports, prompting a discussion on reporting agreements among stakeholders.

• Nebraska operates under public power ownership, leading to different regulatory conditions compared to other states. This affects their inclusion in comparative data.

Clean Energy Options for Consumers

• An anecdote about Evergy’s website highlights consumer options for clean energy usage, albeit at a higher cost. This reflects growing interest in sustainable energy choices among consumers.

Economic Impact of Data Centers

• The economic benefits of data centers are discussed; they provide significant property tax revenue relative to city services used. For example, small data centers can generate substantial tax income for local governments.

Regulatory Framework for Data Centers

Energy Purchase Commitments

• Questions arise regarding data centers' energy sourcing preferences—balancing self-generated power with grid reliance for reliability purposes.

Local Utility Regulations

• Under Senate Bill 98, data centers must purchase electricity from local utilities for ten years but can also integrate their own generation solutions while still being connected to the grid.

Understanding Power Purchase Agreements and Cost Allocation

Overview of Senate Bill 98 Compliance

• The speaker expresses a non-legal opinion, supported by KCC lawyers, that signing a 12-year contract with Evergy for power purchase meets the requirements of Senate Bill 98.

• Customers are compensated for generators they contribute to the system, ensuring compliance with the bill's stipulations regarding power procurement.

Billing Determinants and Regional Support

• All billing determinants will continue to flow through, distributing costs associated with distribution and transmission lines.

• By contributing power to the grid, customers not only serve their own needs but also assist the region during peak demand times.

Equity in Benefit Distribution Among States

• A question arises about Kansas receiving lower benefits compared to other states; discussions on fairness in benefit allocation are ongoing.

• The newly formed CARE Team within SPP is addressing these disparities, focusing on equitable cost-benefit ratios among states facing reliability issues.

Concerns Over Cost-Benefit Analyses

• There is skepticism regarding cost-benefit analyses predicting significant increases in power bills if transmission lines are not built.

• The analysis suggests that while current bills may not decrease significantly, building new infrastructure could prevent future substantial increases in customer bills.

Implications of Transmission Planning

• Some studies indicate lopsided benefit-cost ratios from transmission planning efforts, raising concerns about fairness and effectiveness in addressing regional energy needs.