In a reversal from previous legislative sessions, Kansas City utility Evergy is backing proposals in two states aimed at buffering customers and investors from the costs associated with accelerated coal plant retirements.
Securitization legislation has gone nowhere in both the Kansas and Missouri legislatures for several years. Evergy, which serves about 1.6 million customers in eastern Kansas and western Missouri, has opposed the bills on the grounds that they were unnecessary and a potential financial risk.
On Friday, though, a bill drafted by Evergy was introduced in the Kansas Senate (SB 245) and referred to a finance and insurance committee. And a hearing for a similar bill (SB 202) in the Missouri Senate has been scheduled for next week.
What changed? Evergy government affairs director Jason Klindt said the pivot is a result of changing demands from customers and investors.
“We’re long on old coal generation. We’re seeing increasing demand from industries and municipalities for access to renewable energy. That’s new in the last couple years,” Klindt said. “If you look at Washington D.C., Wall Street and our customers, we are under increasing pressure to meet the demand for more renewable power. The ability to do that depends on retiring old coal generation.”
Securitization, also known in the utility world as ratepayer-backed bonds, has been used for years to, for example, finance repairs to equipment damaged in storms. More recently, clean energy promoters have cast it as a key to speeding up the retirement of coal-fired power plants. With permission from state regulators, utilities can arrange for the outstanding debt on assets to be sold as bonds that are then repaid by customers’ monthly bill payments. Those ratepayer-backed bonds typically can snag interest rates of 2% to 4% because repayment is considered almost guaranteed. The bottom line for customers: The bonds are costing them about one-third of what they would pay if the utility were still paying off the outstanding coal-plant debt. If Evergy were to securitize the remaining $300 million owed on a coal plant, for example, ratepayers would save about $15 million, according to Klindt.