Image
Share:
Evergy President and CEO David Campbell took ACG’s April 19 breakfast audience “Back to the Future of Sustainable Energy.”
That future for Evergy rests on three pillars, Campbell said: affordability, reliability and sustainability with a transition to clean energy. The company aims for a 70 percent reduction in carbon dioxide emissions by 2030 and net-zero by 2045.
Campbell became Evergy’s president and CEO in January 2021, succeeding Terry Bassham, the company said in a December 2020 statement. Campbell had been executive vice president and chief financial officer of Dallas-based Vistra Corp.
Evergy was created through the 2018 merger of Great Plains Energy (parent company of Kansas City Power & Light) and Westar Energy. Evergy is “a fully integrated utility” encompassing electricity generation, transmission and distribution to the end customer, Campbell said. As a regulated utility, the company is “effectively a monopoly.”
“We have the privilege and obligation to serve every customer in our service territory,” he said. “So, we need to have a service that works for everyone.”
Because Evergy is a regulated utility, “every price we charge is approved by our states,” Campbell said. The company gets its costs as a pass-through and an authorized return on investments. The company spends $2 billion in capital a year through a mix of equity and debt.
Evergy’s reliability has improved, measured by the average number of minutes its customers have power outages a year and the average number of service interruptions a year, he said. Its average rate increase since 2018 is 1 percent. Evergy’s regional competitors’ rates have increased 11 percent. Rates have decreased in the former KCP&L region.
The growth of electricity is at historic highs due to large new loads, Campbell said. Electricity has been growing about half of 1 percent for the past 20 years across the United States while efficiency has increased.
Evergy expects a 2 percent to 3 percent demand growth rate over the next five years and will have to start building plants to serve the increased demand. Planned large data centers for Meta and Google and a big electric vehicle battery manufacturing plant in DeSoto will drive that demand increase.
This kind of growth is the best way to drive affordability by spreading Evergy’s fixed costs, Campbell said. The Great Plains-Wester merger drove a roughly 30 percent cost reduction since 2018 with improved service reliability. Evergy also reduced costs by cutting 20 percent of its workforce since the merger was completed.
Evergy provides electricity from the following sources: fossil fuels, 50 percent; wind, 29 percent; nuclear, 20 percent; and other renewables, 1 percent. It has reduced emissions by the following amounts since 2005: sulfur dioxide, 98 percent by using less coal and better equipment; carbon dioxide, 53 percent, though CO2 is not a regulated emission; and nitrous oxide and nitrogen dioxide, 90 percent.
The company uses nuclear and wind energy at a “higher average capacity factor” than fossil fuels, Campbell said. Attaining net-zero emissions will depend on new technologies using nuclear and improved battery storage, for example.
During the program’s question-and-answer segment, an audience member asked about Evergy’s capacity to sell electricity to other markets. Campbell said transmission infrastructure was lacking to do that.
Another audience member asked about the future of using nuclear power to generate electricity here. Nuclear power’s high capital costs make it challenging, Campbell said.
“New nuclear has been 10 years away for the 20 years I’ve been in the power space,” he said. “It’s more promising than 10 years ago. ... I hope nuclear can get there. It’s well run and safe in the U.S. We need nuclear to get to net-zero.”
Another question: What’s being done about cyber risks to the power grid?
“We’ve had for more than a decade rules around cyber security,” Campbell said. “They’re third-party audited, (but) I think there is vulnerability.”
With the expected growth in demand for electricity, that transmission problem will be a critical one to solve, he said. Evergy has a plan to expand transmission capacity. The company has taken criticism for spending too much on it.
“To be fair, we don’t typically build excess capacity,” he said. “We’re trying to get the right balance.”