Liberty on Friday filed a request with the Missouri Public Service Commission that could result in two increases for its Missouri customers. It also filed for a smaller, abbreviated increase for its Kansas customers. No filings were announced for its Oklahoma or Arkansas customers at this time.
The Missouri request, if approved in full, would raise by $12.76 per month — 9.68% — the bill of its typical electric customer in Missouri, defined as someone using around 1,000 kilowatt-hours per month. That part of the increase would recover the Joplin-based utility’s recent investment in wind turbines, solar, smart meters, infrastructure upgrades and more.
The other part of the request, if approved, would appear as a new line item on customers’ bills and would cover the cost of natural gas during the Arctic weather in February, when Midwest utilities experienced record price spikes. It would be $7.08 per month for 13 years, which is more than $84 per year, or more than $1,000 total for that same typical customer.
The requests will be reviewed by the staff of the Missouri PSC and the Missouri Office of Public Counsel, which will make recommendations to the commissioners. A decision is not expected until next spring.
Wind farms, and more
Liberty has spent several years building 69 wind turbines at its North Fork Ridge Wind Farm in Barton County, another 69 turbines at its Kings Point Wind Farm near Golden City and another 139 turbines at its Neosho Ridge Wind Farm north of Parsons, Kansas.
Together, the three wind farms will produce 600 megawatts of power for the utility and are a key part of its transition to renewable energy.
In 1997, the utility — then The Empire District Electric Co., generated more than half of its electricity from locally burned coal and also purchased about 40% of its power — much of that also from coal. With all turbines on line, the utility will be about 40% Liberty-owned wind, with another 10% purchased wind and 21% coal (locally generated and purchased) and 25% natural gas. Liberty also gets a small percentage of its electricity from the Ozark Beach (Taneycomo) dam.
The three wind farms represent an overall investment of $1.2 billion, according to Liberty officials, but because there is no fuel cost, they say it will be cheaper for customers in the long term than staying with fossil fuels for generations.
“We do believe this provides long-term savings for our customers. It’s also better for our environment,” said Tim Wilson, vice president of electric operations for Liberty’s Central Region.
Under Missouri regulatory rules, utilities are not allowed to ask for a rate increase until the investment is “used and useful,” meaning it is online and fully operational, which the wind farms are now, according to company officials.
The rate request also includes recovery for $43.5 million the company has invested in smart meters for its Missouri customers and several million it has invested in its first solar farm.
Smart meters are digital meters that, when fully installed, allow customers to access near real-time information about their energy usage. The utility is planning to soon launch the platform that will allow customers to log in via a website and/or mobile app so they can more closely manage their electric usage.
Earlier this year, Liberty also completed a 2.2-megawatt solar farm near Prosperity in Jasper County. Liberty officials have said the solar farm is a pilot project and that more solar operations are planned around the area.
Wilson said the utility also has made investments to strengthen and improve its system, including new substations, thousands of wildlife guards to prevent outages and sectionalizing devices that automatically isolate an outage to as few customers as possible.
“We have really been working on our reliability,” said Wilson.
The request also includes the cost of retiring debt for its Asbury coal-fired generating station north of Joplin; the plant has been converted to the Asbury Renewables Operations Center, said Wilson.
“It’s really our renewables hub now,” he said.
The other part of the rate increase will cover Liberty’s cost of buying natural gas when prices spiked in February because of the extreme and prolonged cold snap throughout the Midwest and the South that Liberty and other utilities said created record-demand and even forced rolling power interruptions.
The PSC has opened an investigation into the operation of investor-owned utilities in the state, including Liberty, during that time, but no report has been completed.
Temperatures that fell as low as minus 15 degrees in Joplin on Feb. 16 resulted in rolling electrical blackouts and “extreme natural gas spikes in Missouri,” according to the PSC statement. The low tied for the coldest temperature recorded in Joplin in more than a century; Joplin also hit minus 15 degrees in 1989. Liberty said its wind turbines continued to operate, but it reduced production at its gas plants because of availability and at its coal plants because of coal freezing up.
Aaron Doll, senior director of energy strategy, said market prices for a megawatt of energy typically average around $20 that time of year.
“We had prices that averaged in the $4,000 range for a sustained four- or five-day period,” Doll said.
He said the utility typically buys part of its fuel at the beginning of the month.
“We try to buy about 50% of what our units are going to expect,” he said, referring to the State Line and Riverton generating plants, which burn natural gas.
Doll noted that their purchase contracts are reviewed and evaluated to see if they are prudent by state regulators. Asked if they buy natural gas on long-term contracts, Doll said that has been an issue in the past by the state’s Office of Public Counsel, which represents ratepayers before the PSC, because if rates went down customers would be locked in to the higher prices.
The cost of the fuel is passed through to customers and typically shows up as a separate charge or credit on customer bills.
Not only was Liberty having to buy some of its natural gas at the higher price, but it also was concerned about not being able to get gas because wells were knocked offline by the cold weather.
Doll said that if they did not spread the cost of the fuel out over 13 years, customers would see a more dramatic increase in their bill but over a shorter term.
Charlotte Emery, senior manager of rates and regulatory affairs, said another option might be available for customers, but it depends on the support of the governor.
This spring, Missouri lawmakers passed a measure that would allow the issuance of bonds to pay off utility obligations, including the fuel costs during the extreme weather. In return, consumers would see a tariff added to their monthly bills to repay the bond. If Missouri Gov. Mike Parson signs the legislation, it would be explored as an alternative to the proposed $7.08 a month charge and considered independently, removed either in whole or in part from the current rate case.
In a statement, David Swaim, Liberty Central Region president, said: “We recognize the hardship that this extreme weather event, coupled with the pandemic, had on customers. Throughout the last year, we’ve taken a number of steps to help customers. These included halting service disconnections for nonpayment at the onset of the pandemic, offering expanded payment arrangements, and connecting customers experiencing financial hardship with available resources. Our efforts to help customers continue as we address the consequential impact of Winter Storm Uri. If costs are not spread out over an extended period of time, as we have requested, our customers will suffer. We’re taking the necessary steps to make sure that doesn’t happen and that we keep energy affordable.”
Empire also filed a request with the Kansas Corporation Commission to adjust base electric rates for its Kansas customers. The typical customer in Kansas using 1,000 kilowatt-hours per month would see their monthly bill rise by $4.97, or 4.47%, the company said. That would be to recover the cost of investing in renewables and beefing up infrastructure.
No filings were made yet in Kansas for recovery of winter storm costs.
Rate history with Liberty
This is the second full rate case Liberty has sought for Southwest Missouri since acquiring Empire in 2017.
Liberty filed a request in August of 2019, asking to increase its annual electric revenues by $26.5 million in Missouri. Liberty customers in Southwest Missouri would have seen their monthly bills rise by 5.9% if the rate request was approved in full, and a customer using a thousand kilowatt-hours of electricity per month would have seen the bill rise by $7.85.
The Missouri PSC allowed only an annual revenue increase of $992,400, meaning a residential customer using a thousand kilowatt-hours a month would see an increase of 48 cents per month, or 0.37%.