<figure>
 <img src="https://media.eaglewebservices.com/public/2020/1/1578926573801.jpeg" alt="An independent report suggests three ways to improve how the state's electric utilities rates.&nbsp; Brian Grimmett / Kansas News Service file photo " />
 <figcaption>An independent report suggests three ways to improve how the state's electric utilities rates.&nbsp; Brian Grimmett / Kansas News Service file photo </figcaption>
 </figure>By BRIAN GRIMMETT <a href="https://www.kmuw.org/post/analysts-tell-lawmakers-kansas-electric-rate-making-system-favors-utilities">Kansas News Service</a>An independent review of Kansas’ rising electricity prices shows the 
current system for setting rates could use some improvements.In a <a href="http://estar.kcc.ks.gov/estar/ViewFile.aspx/S20200108144309.pdf?Id=1a3a31e5-e38d-4445-aada-1cd0170a7b85" target="_blank">lengthy report requested by state legislators</a>
 and submitted by London Economics, analysts concluded three main 
things: The current ratemaking process has been slightly balanced in 
favor of utilities, regulators are limited in their ability to protect 
consumers from paying for underused investments (such as aging coal 
plants, and additional bill surcharges and have been a key driver of 
rising rates.The report looked at rates from all Kansas 
electric utilities — from co-ops to municipals to Evergy, the largest 
utility in the state with about 1.5 million customers.“There are
 some near-term recommendations,” Evergy Chief Customer Officer Chuck 
Caisley said. “But the report doesn’t say, ‘Do this and rates will go 
down’ on any page, any graph, any appendix in the entire thing.”Lawmakers<a href="http://www.kslegislature.org/li/b2019_20/measures/documents/summary_sb_69_2019" target="_blank"> requested the study in a bill passed during the 2019 legislative session</a>, saying at the time that they were concerned electricity prices were no longer competitive with neighboring states.They
 wanted an independent organization to look into the effectiveness of 
current ratemaking practices and whether there were any options 
available to state regulators or the legislature to help rates become 
regionally competitive again.The report, which came out Wednesday, offered three main suggestions.Suggestion 1:
 The Kansas Legislature should create a state energy plan and require 
utilities to regularly submit an integrated resource plan, or IRP.The
 state’s plan would allow the legislative and executive branches to set 
short and long-term goals about pricing, future transmission needs and 
renewable energy, giving regulators a clear framework for 
decision-making. And the IRP would encourage utilities to use the most 
cost-effective methods for meeting the state’s goals.Suggestion 2: Lawmakers
 should consider performance-based regulation, with the state setting 
targets to incentivize electric companies to be more efficient.&nbsp; They 
would then be rewarded for that, rather than solely for building more 
power plants or transmission lines.Suggestion 3: The
 legislature should make laws so that utilities can refinance their 
loans on older, uneconomic investments. This is a process known as 
securitization and could potentially ease the financial burden when 
utilities have to shut down coal-fired power plants and other, less 
profitable long-term investments.<h2>The responses</h2>Evergy
 generally supports the recommendations, Caisley said, but working out 
the details of any proposed legislative changes would be important. He 
added that Evergy is already working on an IRP as a condition of the 
merger between Westar Energy and Kansas City Power &amp; Light.He
 also applauded Kansas Gov. Laura Kelly for proposing to work on a new 
state energy plan last year, well before this report recommended it.“We
 are thrilled that we have a governor that realizes that firm policy 
direction is important for consumers and it’s important for utilities,” 
he said.Advocacy groups, such as the Kansas Industrial Consumers
 Group, which lobbied for the independent study, are worried the state’s
 high electricity rates are bad for businesses.“The utilities 
have prospered in the last decade way above what the S&amp;P 500 is,” 
organization president Jim Zakoura said, “while the ratepayers in Kansas
 have seen their rates increase 70%.”He said the best chance of 
Kansas seeing competitive rates again is for the legislature to take the
 recommendations seriously and make sure they’re implemented.Dorothy
 Barnett is the executive director of the Climate and Energy Project, a 
clean-energy advocacy group. She said&nbsp; state lawmakers and regulators 
need to finally start planning for grid modernization and the rapid 
shift to renewable energy.“It’s time to start talking about different ratemaking structures,” she said.Ultimately,
 the report concludes that there is no single, easy fix to reducing 
Kansas’ electricity rates. Each option considered comes with 
implementation costs and risks.The report is the first part of a
 two-part study; the second part will look at more specific policy 
choices, such as how to integrate electric vehicles and whether advanced
 energy technologies like battery storage and microgrids will help 
consumers. It must be finished by July 1.Legislators in the 
House and Senate Utilities Committees are expected to be briefed on the 
report’s findings when the session begins next week.Brian 
Grimmett reports on the environment, energy and natural resources for 
KMUW in Wichita and the Kansas News Service. You can follow him on 
Twitter <a href="https://twitter.com/briangrimmett?lang=en">@briangrimmett</a>
 or email him at grimmett@kmuw.org. The Kansas News Service 
is a collaboration of KCUR, Kansas Public Radio, KMUW and High Plains 
Public Radio focused on health, the social determinants of health and 
their connection to public policy.

Analysts: Kansas electric rate-making system favors utilities