KCC staff stress need for ‘reliable' power generation, defend support of Evergy natural gas plants

Yahoo

23-04-2025

Kansas Corporation Commissioners, l to r, Dwight Keen, Andrew French and Annie Kuether, listen to testimony during Evergy's three-day hearing relating to the company's plans to build two new natural gas plants. (Morgan Chilson/Kansas Reflector)
TOPEKA – Kansas Corporation Commission staff on Tuesday testified about the need to expand Evergy's power generation capabilities and defended their decision to support the company's request to build two natural gas plants.
Evergy and other utility companies file an Integrated Resource Plan with the KCC that details its decision-making process, expectations of capacity needs in the future and how those needs will be met.
During the second day of a three-day KCC hearing, opponents questioned Evergy and KCC officials about why they believe natural gas plants are the best way to provide energy to its customers in the future. The company has announced plans to build two plants, the Viola power plant in Sumner County, expected to be online in 2029, and the McNew power plant in Reno County, in service in 2030.
The plants, according to testimony, will add 710 megawatts of power each to the company's generation portfolio and have an expected life of 40 years. Generally, 1 megawatts will power 1,000 homes, so the addition of 1,420 megawatts will power about 1.4 million homes.
Justin Grady, KCC deputy director of utilities, testified there are 157 new natural gas plants being contemplated or being built in the country right now. He said the need for reliable gas generation capability is significant.
'I spent quite a bit of time in my testimony in this docket on the issue of reliability for these power plants,' Grady said. 'Admittedly, if I'd had to write this testimony two years ago, that would have been much more difficult testimony to write. As you know, every major national or regional reliability organization for a couple years now has really been sounding the alarm, saying, 'Hey, we need to slow down a little bit on the energy transition.' This is not the time to be making permanent retirement decisions. Especially for winter reliability, we really need to maintain the dispatchable capacity we have. We might need to add new dispatchable capacity. So I think we need these plants.'
Dispatchable generation refers to power generation plants that can ramp up or down quickly based on an area's need for power.
Grady said the Southwest Power Pool, which is the regional transmission organization that ensures reliable power supplies and infrastructure, has also been expressing concerns about reliability within the system.
Indeed, the organization's website highlights the challenges facing the industry.
'We are facing an increase in extreme weather events that are causing grid emergencies, tight operating conditions, and risks to human health and safety. In the past, there were only a few weeks in summer when SPP risked running out of energy,' Southwest Power Pool President Barbara Sugg said in a letter posted online. 'Now, we are issuing grid alerts throughout the summer as well as during winter. Our risk of having inadequate supply to meet demand has greatly increased, and grid emergencies are likely to last longer, cause more damage and increase risks to human health and safety.'
Jim Zakoura, an attorney for the Kansas Industrial Consumers group, which represents large-volume energy users, questioned Grady about why KCC staff didn't offer options for the commissioners to consider, such as putting one plant in and waiting five years to put another plant in, that would have decreased the retail rate impact in the present plan. That has been their usual practice, Zakoura said.
Grady agreed that it has been, but said the depth of the proposal for this hearing required him to work 60 to 80 hours per week for six to eight weeks to properly evaluate and then file the testimony in this docket.
However, he said, some of his testimony shared views on whether or not Evergy should abandon its thermal generation plans and move in the direction of more solar, battery storage and wind.
But if Evergy would have appeared before the commission to only build half of the natural gas plants and instead to double-down on solar, Grady said he would not have agreed with that plan.
'I would not have been a supporter of that, unless they showed me critical use permits in hand from local communities, willing local communities that wanted to host that solar,' Grady said. 'It's getting more and more difficult to build those kind of resources.
Grady did not hesitate to point out that he disagreed with several witnesses who entered testimony about other ways Evergy could achieve its goal of creating more power generation. He referred to testimony by Michael Gorman, a consultant hired by KIC who recommended that KCC deny Evergy's petition to build two plants.
Gorman's testimony pointed, among other issues, to Evergy's decision to choose a resource plan that is not the least expensive option, that customers will pay a Construction Work in Progress, referred to as a CWIP, and that there are unknowns about the new plants costs. The CWIP charge that can be added to customer bills was approved by the Kansas Legislature in 2024. It allows utility companies to bill customers for a construction project while it is being built instead of waiting until it is complete and power is being generated.
Grady said that without Gorman's testimony in front of him he believed the primary objections were to the early retirement of the coal plants, which is in Evergy's plans for the next few years.
'My recollection was his primary criticism was that this plan relies on and is predicated upon the retirement of Jeffrey 2 and Jeffrey 3. As I interpret from his testimony and from your (Zakoura's) opening statement, the position generally of KIC parties in this docket, you guys generally don't want to retire those coal facilities and you don't want to plan for the retirement of those coal facilities,' Grady said. 'That's a pretty fundamental difference of opinion that we have in this case.'
Zakoura questioned the cost to consumers if Evergy retires coal plants that have an existing net book value, meaning the value remaining if the asset has not been fully depreciated. Grady said that while KCC can't direct Evergy to use a Kansas securitization statute, he fully expects the company would do so, which would mitigate the costs to consumers. The securitization statute allows companies to repay debt through issuing bonds so the debt can be repaid over a longer time period. For instance, Kansas Gas Service used securitization after winter storm Uri in 2021 to help customers absorb the costs of meeting energy needs generated by that storm in smaller increments.
Grady had similar objections to testimony by Citizens Utility Ratepayer Board witness Lucy Metz, an associate with Synapse Energy Economics, who was a proponent of looking for other ways to expand Evergy's power generation than through construction of natural gas plants.
'Evergy Kansas Central did not robustly analyze and test the market for alternatives to Viola and McNew — including batteries added at sites with existing interconnection rights and additional gas conversions of coal units — and therefore has not demonstrated that the CCGTs (combine cycle gas turbines) are the lowest cost way to meet its capacity and energy needs,' Metz said in her filed testimony. 'Solar and battery additions, including the Kansas Sky project, are likely lower cost than Viola and McNew, will shield ratepayers from future cost risks, and can be procured incrementally. This would allow Evergy greater flexibility to adapt to changing market conditions and supply chain disruptions.'
Her testimony, Grady said, misses the mark.
'Maybe some of this isn't her fault because it was developed prior to the recent turmoil with regard to potential trade issues and tariffs, but as evidenced by literally today's announcement of solar tariffs on southeast Asia, I think there is an incredible amount of risk, uncertainty in terms of our ability to import into this country, to build significant amounts of utility-scale solar,' Grady said. 'Everybody in this room knows there is a lot of uncertainty with regard to the Clean Energy Tax Credits and the future of those, and I was real direct about that in my testimony.'
Grady said he'd been a vocal supporter of solar but the uncertain environment right now makes a difference.
'I'm still supportive of solar,' he said. 'But I think we all owe it to ourselves to back up a little and realize, this is a pretty uncertain environment to be putting all of our eggs in the solar and battery basket. I disagree with the fundamental conclusions that she draws.'
The KCC hearing continues Wednesday, with experts who disagree with Grady's conclusions expected to testify.