Yesterday, the Kansas Corporation Commission (KCC) issued an order approving a settlement changing rules for customers of Evergy Kansas Central, Inc., Evergy Kansas South, Inc., and Evergy Metro, Inc. (collectively Evergy), a monopoly electric utility in Kansas and Missouri that provides energy to 1.7 million residential, commercial, and industrial customers. Vote Solar and the Sierra Club, represented by Earthjustice, opposed the settlement due to their belief that the KCC lacks authority under Kansas law to regulate the wholesale activity of entities that are not public utilities and because federal law precludes states from dictating who can participate in wholesale power markets.

In January 2023, Evergy filed a joint application seeking approval to change its rules (“tariffs”) to allow the monopoly utility to be the gatekeeper for whether its customers can offer demand response services into federally-run wholesale markets. The settlement, which Vote Solar and the Sierra Club oppose, contains slight improvements from Evergy’s original filing but still requires customers to get Evergy’s permission and to fill out complicated reports to the utility justifying their clean energy activities every three months. Customers who want to enroll their Electric Vehicle (EV) charger, smart thermostat, irrigation pump, or smart water heater in a demand response program will have to navigate that red tape. Ultimately, they have to receive Evergy’s blessing to offer clean energy that Evergy has every incentive to oppose.

“The decision is disappointing because it doesn’t comply with the law, and the Commission’s position that the Federal Regulatory Energy Commission doesn’t have a role in this process is dubious,” said Ty Gorman, Senior Kansas Field Organizer for the Sierra Club. “This decision authorizes Evergy to block competitive, low-cost, clean energy that competes with the monopoly utility’s polluting coal and gas plants, simultaneously increasing air pollution and customer bills for its Kansas customers. We cannot allow utilities to circumvent the law and harm their customers.”

The settlement allows Evergy to control whether its captive customers can offer demand response service to wholesale markets and under what conditions. Signatories to the agreement include Evergy, Citizens’ Utility Ratepayer Board (CURB), The Empire District Electric Company (Empire), Voltus, Inc (Voltus), Southern Pioneer Electric Company, and Sunflower Electric Power Corporation. The KCC determined that its general authority over utilities allows it to approve the tariff. Additionally, the Commission stated that the settlement is not preempted by the Federal Power Act because the tariff does not regulate wholesale activities but only the safety and reliability of the distribution grid. Vote Solar and the Sierra Club adamantly disagree with both opinions set forth by the KCC and point out that Evergy can prevent its customers from participating.

“Evergy’s proposed changes fail to adequately address the concerns of low-income customers who are disproportionately affected by the decisions made in these proceedings. By endorsing an agreement that may not fully align with the needs and rights of these communities, we risk exacerbating the energy disparities faced by the most vulnerable among us. By undermining demand response, Evergy is undermining cost savings, grid reliability, and sustainability,” said Rick Gilliam, Senior Regulatory Director, Interior West for Vote Solar.

Demand response empowers utilities, grid operators, and consumers to balance electricity supply and demand in real-time use data. By allowing for the reduction or shifting of electricity consumption during periods of high demand or grid stress, demand response helps to avoid blackouts, reduce the need for costly infrastructure investments, and lower electricity costs for consumers. Additionally, demand response plays a vital role in integrating renewable energy sources like solar and wind into the grid, enabling better alignment of energy production with peak demand periods.

“The KCC overstepped its authority by authorizing a monopoly utility to decide whether its captive customers can offer clean energy resources into the wholesale markets and compete with Evergy’s dirty coal and gas plants. Demand response is one of the most effective tools to reduce reliance on burning fossil fuels and balance the grid to enable greater levels of wind and solar generation. The federal government regulates wholesale power markets and encourages competition to lower rates with demand response. The KCC overstepped by inserting the anti-competitive monopoly utility between clean energy resources and the market. The KCC’s action threatens to hold back not just demand response, but wind and solar in the state, and only benefits Evergy’s uncompetitive coal and gas plants to the detriment of residents,” said David Bender, Earthjustice attorney.

The Sierra Club and Vote Solar are considering their next steps, including filing a petition for reconsideration at the KCC. They have 15 days to file the petition from the day the KCC’s order was approved.