Published: February 28, 2025
On January 31, 2025, Evergy utility subsidiaries filed a Motion to File Legal Analysis Regarding Standards for Determining Capital Structure with the Kansas Corporation Commission. This Motion was filed concurrently with an application for a general rate case.1
Like many jurisdictions, capital structure has been a contested issue in Kansas. Due to the prevalence of black box settlements, the issue is not always fully litigated. In anticipation of heavy opposition to its proposal to use the actual standalone capital structure of its Kansas utilities in calculating revenue requirements, Evergy took the unusual step of proactively filing this Motion to provide the Commission with a legal foundation at the outset of the proceeding rather than during post-hearing legal briefing.
In summary, the Motion addresses:
- The Commission’s policy to “use a capital structure that will result in the lowest overall cost of capital that is representative of utility operations”
- The Standalone Approach
- Consolidate Capital Structure and FERC’s three-part test
- Hypothetical Capital Structures
- Capital Structure and a Fair Rate of Return
- Capital Structure and Corporate Veil-Piercing Principles
- And concludes the Standalone Approach should be the presumptive standard and to overcome that presumption a party must present substantial competent evidence demonstrating the actual capital structure is imprudent or inconsistent with industry norms, or there has been intentional manipulation of corporate capitalization
Concentric Energy Advisors’ Cost of Capital practice helps North American utilities to understand the impact of regulatory activity such as the Evergy filing on their own businesses and regulatory strategies.
For more than twenty years, Concentric Energy Advisors has supported clients with a sophisticated and industry-based perspective on capital structure and return on equity. We have provided expert testimony and support to clients the United States and Canadian provinces. For more information, please contact info@ceadvisors.com
1Before the State Corporation Commission of the State of Kansas, In the Matter of the Application of Evergy Kansas Central, Inc. and Evergy Kansas South, Inc. for Approval to Make Certain Changes in their Charges for Electric Service. Docket No. 25-EKCE-294-RTS
— All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, related companies, or clients. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.