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Utility companies want to track COVID-19 costs

Expenses could be recovered from customers
Posted at 5:00 PM, Nov 12, 2020
and last updated 2020-11-13 00:10:26-05

KANSAS CITY, Mo. — State regulators in Missouri will soon make a decision that might impact monthly utility bills down the road.

Evergy, the Kansas City metro's primary utility company, is asking for permission to track costs and savings related to COVID-19. If the request is approved, the company could decide later to recover its losses.

According to an application filed with the Missouri Public Service Commission, which regulates investor-owned utilities, Evergy is seeking approval of an accounting authority order.

The order is an accounting technique that allows a utility to defer and capitalize on certain expenses.

When it's time for Evergy's next rate case in Missouri, which is in 2022, the company can decide whether or not to seek recovery from customers by raising rates.

"The point of this order, and we really want to reassure our customers, is that we're simply tracking costs and savings related to an unusual event," Andrew Baker, an Evergy spokesman, said.

The expenses include the cost of providing personal protective equipment (PPE) to employees, some waived fee revenues, certain assistance programs for customers and increased debt expense.

In its May application for the order, Evergy cited the closures of department stores, casinos and movie theaters, saying those have "reduced Evergy's revenues substantially and will continue to do so for an unknown period of time."

The request also included the impact of suspending disconnections and offering flexible payment plans. Evergy voluntarily paused disconnects in March and extended the moratorium until July.

While Evergy's third-quarter results showed only a slight dip in earnings, net income from January through September shows a $39 million decline this year compared to 2019.

The company also filed an application for an accounting authority order with state regulators in Kansas.

Two advocacy groups, the Kansas Industrial Consumers Group and Kansas for Lower Electric Rates, opposed the order. The advocacy groups alleged Evergy was asking to be "economically made whole at ratepayer expense from the effects of the COVID-19 pandemic."

The Kansas Corporation Commission, however, approved it, allowing Evergy to track lost revenue from the pandemic.

The order requires Evergy to submit monthly filings with several statistics, including the number of accounts in arrears.

More than 17,500 Evergy Kansas Metro accounts were behind on bills for a total of $5.9 million as of September, according to the latest filing. That represents a drop from the figure for April, which was nearly 21,000.

Calls for More Consumer Protection

In the Missouri case, some advocates are calling for more consumer protections.

"We understand that Evergy needs to seek some sort of regulatory safeguards for this, but to do that in the absence of any safeguards for their customers we think is not something that the state should allow," James Owen, executive director of Renew Missouri, said.

Renew Missouri is a nonprofit that advocates for energy efficiency in the state. The organization, along with the National Housing Trust, intervened in Evergy's case before the commission.

Both groups are urging Evergy to offer more bill assistance, including long-term payment plans and even some debt forgiveness.

That could insulate customers if the company decides to recover costs at a later date.

"I'm not asking for a clean slate here," Owen said, "but I'm asking for some percentage of these bills to be looked past and forgiven and not have to be applied to other ratepayers."

Owen pointed to a recent agreement reached by advocates and Spire, the gas utility, as a good start.

As part of its accounting order, the company will offer up to $400 in assistance for qualifying customers who are behind on bills. Consumers also have the option to enroll in an 18-month payment arrangement through the end of the order, which is supposed to last until March 31, 2021. More information can be found on Spire's website.

"We have customers who are struggling for the first time," Adriane Yates, Spire's director of customer experience business services, said. "They've never gone through this. They don't know what options are out there, and there needed to be additional options."

Evergy's Response

Evergy largely pointed to consumer help offered at the start of the pandemic and over the summer.

The company did offer a 12-month payment plan to customers, but it ends in December. A company spokesperson said it might be extended.

From June through August, Evergy also offered credits to eligible customers to help them catch up on bills, and late payment fees were waived through the end of the year.

"Through many different payment plans we feature, we've been able to keep about 100,000 customers up and running," Baker said.

In May, the company announced $2.2 million in contributions for COVID-19 relief.

However, Renew Missouri said that amount was split between Kansas and Missouri, and only a small portion went directly to energy bill assistance.

Evergy also has offered to waive late fees through March of next year and to continue discussions with advocates about additional help, according to a proposed agreement submitted to the commission.

In addition that agreement stipulates Evergy will not defer any lost revenues from reduced customer use during the pandemic.

The National Housing Trust and the Office of Public Counsel filed objections to the agreement, which led to the scheduling of a hearing in the case. It began Thursday morning and is slated to continue on Friday.

Evergy repeatedly told the 41 Action News I-Team that no decision has been made regarding a rate hike as a result of the pandemic.

However, advocates said it's important to pay attention now and push for consumer protection before a rate case goes before the commission.

"You might say, 'I'm paying my bill... Why should I worry about somebody else who's behind? Why should I worry about someone who lost their job?'" Owen said. "In the end, we all end up paying for that."

Evergy and Spire are not alone; in October, Ameren Missouri also filed an application for an accounting authority order. If an agreement is not reached, hearings will be held in that case as well.