What Impacts Rates
There are many reasons KCP&L is seeking an increase in base rates. These rate increase requests represent the cost to replace equipment in order to maintain a reliable electrical system, make needed infrastructure and environmental investments required by the federal government, meet state renewable energy mandates and expand our energy efficiency programs.
In order to meet the need for additional generation capacity, as part of the filings in our GMO areas (customers who were formerly served by Aquila), we are introducing a number of new energy efficiency programs for customers. KCP&L is the first utility in the state to offer these programs, which will help customers manage their energy usage and save money on their monthly electric bills. We believe that energy efficiency is the cheapest and cleanest way to meet growing energy needs of these customers. Included in this rate increase are the initial costs to offer these programs as well as incentives for when we reach or exceed our goals for former Aquila customers.
Because we do not need additional energy capacity in the Kansas City area, we have decided not to pursue expanded energy efficiency programs for those customers at this time.
Changing energy environment
For decades, KCP&L has been able to maintain some of the lowest rates in the country. One way we kept prices lower for customers was through the sale of electricity to neighboring utilities. By selling excess electricity to other utilities, KCP&L received revenue that it then passed along to customers. KCP&L didn’t profit from the sales of excess electricity.
In fact, just since 2007, this revenue has kept customer rates $219 million lower than they might have been without this type of revenue.
However, in the past few years, the reduced demand for electricity and the low cost of natural gas have significantly reduced the amount of electricity we are able to sell to other utilities. This trend has directly and negatively impacted the amount of revenue KCP&L generates and, in return, the price our customers pay for electricity.
KCP&L is faced with increasing costs to serve customers for many reasons:
• State and federal environmental air quality mandates
• Missouri and Kansas renewable energy standards
• Other new regulations and standards including:
- Cybersecurity requirements
- OSHA regulations
- New reliability standards
• Inflation in the price of goods and materials
• Costs to replace aging infrastructure
• Training new linemen
• Rising transmission costs and fees
• Rising fuel prices