Kansas City BPU's 2023 Rate Case focusing on Nearman Creek Power Station
Synapse provided expert witness support to the Sierra Club in the Kansas City Board of Public Utilities (BPU) 2023 rate case. Our testimony and analysis focused on reviewing the utility’s ongoing operations of Nearman Creek Power Station Unit 1, a coal-fired generator for which the utility is seeking to include operations and maintenance costs, capital costs, and fuel costs in the 2023 and 2024 rate increases. We evaluated the economics of Nearman Unit 1, and examined its recent historical performance and assessed how the plant is likely to perform going forward. We based our assessment on both the utility’s own data, as well as our review of the risks of continued reliance on coal resources.
We found that Nearman incurred costs that exceeded its market energy revenue and capacity value in recent years and is expected to do so in all future years where data is available. We also found that the BPU has not conducted an assessment to determine Nearman’s most economic retirement date, nor its cost impacts on ratepayers. The BPU has not demonstrated the prudence of continuing to invest in and operate Nearman through to 2040 when it is expected to retire.
We recommended that the BPU should commit to retiring Nearman before 2040, to reduce costs for its ratepayers and avoid the risks associated with relying heavily on coal. As part of its next Integrated Resource Plan, the Board of Directors should require BPU staff to conduct an assessment determining the most economic retirement date for Nearman and determine the least-cost pathway forward for BPU ratepayers. In addition, the Board should maintain oversight of Nearman’s commitment patterns into the Southwest Power Pool energy market, and limit self-commitment as much as possible to minimize losses. The Board should also direct BPU staff to avoid long-term coal contracts and contracts with must-take clauses.