Evergy spending plan concerning to consumers
Last year, Elliott Management Corporation (“Elliott”) amassed a large enough economic interest in Evergy to start driving management decisions. Elliott’s intentions could not be more clear – increase shareholder returns.
In February Elliott and Evergy agreed to review standalone plans and a possible merger. The “Modified Standalone Plan” would effectively cut operating and maintenance expenses and increase capital expenditures dramatically. To influence this process, Elliott was able to add two hand-picked individuals to Evergy’s Board of Directors.
In June KCC staff asked the KCC to open a general investigation docket (20-EKME-514-GIE) to explore Evergy’s evaluation of the Modified Standalone Plan or a Merger Transaction.
In August Evergy announced it would not pursue a merger, but rather focus on a Sustainable Transformation Plan (“STP”) to drive shareholder growth.
The STP consists of a massive capital expenditure plan. Remember, utilities primarily make money by investing capital and receiving a return from customers. More investment means more investor profit and higher rates!
The KCC Staff asked the Commission to open a separate general investigation into the STP to evaluate the potential impact on the core elements of the Evergy merger agreement and to gain an understanding of how the STP will effect service and rate trajectories. That docket is 21-EKME-088-GIE.
The STP is concerning to anyone that pays an Evergy electric bill.
In the 2018 Evergy merger (i.e., the merger between Westar and KCP&L), utility executives told the KCC and other parties the merger would result in a $1 billion reduction in capital spending.
The STP increases capital spending by billions of dollars – with a corresponding retail rate increase. Evergy is selecting capex projects that will increase rate base, which will drive up electric rates and shareholder returns for years to come.
Evergy, a $12B company, wants to spend $8.9B over the next five years.
Instead of a massive spending plan Evergy should be working on a plan to reduce electric rates to regionally competitive levels.