Evergy utility building natural gas power plants in Kansas

Oct 22, 2024

Electric utility Evergy will build two new natural gas power plants in Kansas as economic development success increases demand for electricity even as the monopoly plans to retire some coal generation.

Evergy announced Monday it will build the two 705 megawatt combined-cycle natural gas plants. One in Sumner County is expected to start supplying electricity in 2029, and the second in Reno County is expected to come on line in 2030.

"High-efficiency modern natural gas plants will meet the electricity needs for our region's growing economy," said David Campbell, Evergy's chairman, president and CEO, in a statement. "These plants also will bring good paying jobs and tax dollars to Kansas.

"Dispatchable natural gas is an important resource within Evergy's growing and diverse energy portfolio, complementing our planned investment in wind and solar resources and supporting our commitment to affordable, reliable and sustainable electricity."

The Reno County plant will be just south of Hutchinson, at the corner of McNew Road and Morgan Avenue. The Sumner County plant will be across from an existing substation a few miles south of Conway Springs.

The news comes after Kansas lawmakers passed two new laws designed to benefit Evergy's investment in natural gas power plants. That followed testimony from Evergy officials that more power generation was needed by 2030.

Evergy officials said that the "flexible generation" from the two new plants "pairs well with the abundant renewable resource potential in Evergy's service area and will meet stringent emissions standards."

Chuck Caisley, an Evergy executive, told Kansas lawmakers that the monopoly needed more generation by 2030 and wanted to build new natural gas plants. He cited growing demand for electricity as well as coal retirements.

Evergy, which provides power in both Kansas and Missouri, has several anticipated coal power plant retirements in the next 10 years. The company's 2024 integrated resource plan update called for retiring 1,963 megawatts worth of coal generation by 2033. Meanwhile, the corporation would add 2,598 megawatts from natural gas, 1,950 megawatts from solar and 1,250 megawatts from wind.

While there has made a push for more renewable power, like the purchase of the Persimmon Creek wind farm, officials have said energy policy continues to include fossil fuel generation that can be ramped up during periods of peak demand, especially during summer and winter.

"A diverse generation mix is helpful," Caisley said. "So I mean, our wind over the last week has played a significant role in keeping the lights on. Now, it fluctuates so much that it's good to have baseload dispatchable generation underneath it. And by and large, that is fossil fuel derived right now."

More:When cold coal froze, wind farms helped Evergy power Kansas through winter weather

Caisley told the House energy committee in January that Evergy Kansas had excess capacity of about 400 megawatts, which is equivalent to about four wind farms or about half a coal power plant. However, the excess was expected to disappear by the end of the decade.

That is especially due to economic development in the state adding new, large electric customers — particularly Panasonic's electric vehicle battery plant in De Soto.

"Kansas is experiencing record economic growth, and Evergy is prepared to deliver the reliable, affordable, and sustainable energy needed," said Gov. Laura Kelly. "Evergy's multi-billion dollar investment brings direct value to the Hutchinson and Sumner County areas in jobs and tax dollars. It also ensures Kansas can continue to invite business growth that benefits the entire state."

More:Panasonic is crown jewel in Kansas Gov. Laura Kelly's economic-development fueled reelection campaign

"We're pleased to make this investment in communities we serve," Campbell said. "As Kansas and Missouri are seeing historic opportunities for attracting new businesses to our area, Evergy is committed to providing the affordable, reliable and sustainable energy our customers need. This growth benefits all customers by helping to hold down prices."

Then there is the scheduled retirement of a Lawrence coal unit in 2028. Evergy would likely keep it open "as long as that is a viable plant from a cost perspective and as long as we need the generation," Caisley said, but Environmental Protection Agency requirements could require "hundreds of millions of dollars" worth of environmental controls to that plant, making it not "financially viable to operate anymore."

"Right now, coal is not viable to build," Caisley said. "Natural gas is."

While Evergy has the Wolf Creek nuclear power plant, the company indicated it is not looking to add more nuclear in the near future.

"Because traditional nuclear is too expensive to build, and small modular reactor technology is still evolving, utilities are looking to natural gas as the next baseload fuel," Laura Lutz, another Evergy official, told the House tax committee in February.

The Legislature and governor enacted two new laws this year that are beneficial for Evergy's investment. Company officials said that the bipartisan efforts "will help Kansas compete with other states for investment and ultimately save customers money."

In an August call with investors, Campbell touted House Bill 2527. The governor signed it after it passed the Senate 33-2 and the House 119-0. Evergy and various energy groups backed the legislation, which was viewed as a compromise from earlier proposals.

The law's provisions "establish a competitive framework for electric infrastructure investment," Campbell said, and "a construction work in progress mechanism that applies to new natural gas units." He said the law's passage signals support from lawmakers and regulators "for infrastructure investment in support of economic development and the importance of a competitive and constructive regulatory framework for infrastructure investment."

In a May call with investors, Campbell highlighted the passage of Senate Bill 410, which included a 10-year property tax exemption for newly constructed natural gas units. That provision, which was originally in House Bill 2609 and House Bill 2768, had been supported by Evergy.

The governor signed SB 410 after it passed the House 120-0 and the Senate 34-2.

More:Evergy tells investors to expect less profit growth after 'disappointing' Kansas rate case

Evergy officials said the new natural gas plants are expected to serve customers for 40 years. After the 10-year tax exemptions, they are anticipated to pay more than $500 million in property taxes over their service lives.

"We are pleased that a legislative policy we championed is helping ensure a strong energy future for the state of Kansas," said House Speaker Dan Hawkins, R-Wichita. "I look forward to seeing the benefits this brings in terms of jobs, economic growth and energy security for our state for years to come."

Evergy officials said the construction is expected to create more than 500 jobs for each plant. Then, the plants will have between 20 and 40 skilled craft jobs that pay more than $90,000 a year.

"Kansans depend on reliable electricity each and every day to power their lives and their businesses," said Senate President Ty Masterson, R-Andover. "These investments by a long-time Kansas energy company will make our state even more attractive to those wanting to live, work and grow a business in our great state."

More:Evergy electric rate hike approved by Kansas regulators. Here's how much more you'll pay

Jason Alatidd is a Statehouse reporter for The Topeka Capital-Journal. He can be reached by email at [email protected]. Follow him on X @Jason_Alatidd.