Kansas City Power & Light is proposing an increase in some rates for its customers, even though the new federal tax cuts could generate some savings for ratepayers.
KCP&L submitted rate hike requests for its two Missouri service areas in late January. The plan closely follows the announcement of the new federal tax program. The reductions in corporate income tax rates are influencing utilities to pass on those savings.
“We’re always taking a look at where our costs are,” said Courtney Hughley, a spokeswoman for the utility. “It’s much more an art than a science.”
And while KCP&L is seeking state approval for roughly a 0.3 percent rate decrease in base rates on customer bills in its GMO service area, it’s also seeking state approval of a 3 percent increase in fuel and purchased power charges. The GMO service area includes Buchanan, Andrew and 12 other Northwest Missouri counties. The case represents about a $19.3 million increase in annual electric revenues, with KCP&L hoping to recoup spending on such infrastructure improvements as light pole replacements.
Hughley said the fuel charges are not permanent.
“That 3 percent could change. It could go up and down” outside of a rate case, she added.
Hughley said the utility most likely would have filed for a rate update even without the tax cuts, due to those investments.
Simultaneously, the company is asking for the ability to place an additional 1 percent increase in fuel and purchased power charges for its KCP&L-Missouri customers, which includes those in Platte and Livingston counties, and a 1 percent hike in fuel costs assessed on monthly bills for those in the service area. The fuel adjustment charges, as they are formally known, are reset as part of each rate update.
If the rate update is approved, the average residential customer living in the St. Joseph and Northwest Missouri service area would see an approximate $2 per month increase in bills. The case represents about a $19.3 million increase in annual electric revenues, including the rebased fuel charge. Those in the Missouri service area would notice about a $3 per month rise in their monthly statements, with an approximate $16.4 million revenue increase.
The Consumers Council of Missouri is calling on state officials to evaluate how the tax cuts might be rolled into utility costs. Other utilities are cognizant of the situation and researching the potential consequences.
Spire — which has a rate request that features about $34 million in infrastructure revenues pending before the Missouri Public Service Commission on its natural gas services — said it is still working with state officials to determine how best to pass on the impact of lower tax rates. Missouri American Water also is awaiting a decision from the commission and continues to study the tax cuts. On Tuesday, Jan. 23, the company filed a proposal with the PSC to shave its overall requested rate increase from $369.2 million to $348.9 million.
St. Joseph residents are awaiting decisions before the end of the year on proposed rate hikes for all three utilities. A decision in the Spire case is expected no later than March. Regulators may announce their ruling in the Missouri American case in late April or early May. By law, a decision for KCP&L must be made within 11 months of the filing.
But for KCP&L, the choice to proceed was initially announced in mid-January, when it forwarded its intention to file the rate cases. It said the influence came from a decrease in the corporate tax rate from 35 percent to 21 percent.
Of a projected $100 million in potential tax savings, Hughley said approximately $30 million could occur in the GMO territory.
The money also would be used to pay for a new customer information system set to be launched later this year. That network would feature cybersecurity upgrades to protect customers’ personal information. Part of the funding would be devoted to KCP&L’s Clean Charge Network of electric vehicle charging stations, and to permit customers to power their homes and businesses with renewable energy sources such as wind and solar.
“One thing we know is customers want choices,” Hughley said.
She said KCP&L would have sought the changes without the presence of the federal tax cuts.