Liberty customers in Missouri will see higher rates effective Wednesday, in part to pay for the utility’s shift away from coal to renewable energy generation.
Under a new rate structure approved May 17 by the Missouri Public Service Commission, the typical residential electric customer in the state, defined as someone using 1,000 kilowatt-hours of energy per month, will see their bill rise by $9.93 per month, or a 7.53% increase. The company had asked for an increase that would have amounted to $12.76 per month – 9.68% – for the typical residential customer when it filed last year.
The increase would recover the Joplin-based utility’s recent investment in wind turbines, solar, smart meters, infrastructure upgrades and more.
The increase will generate new annual electric revenues for Liberty of $35.5 million, according to the PSC.
At the same time, Missouri customers will also see a change in the fuel adjustment clause charge on their bill. That same residential customer using 1,000 kilowatt-hours of electricity a month will see the fuel adjustment charge increase by $5.85 per month. The current charge is $7.12, so it will go to $12.97.
The FAC represents the charge for the difference between the amount of fuel and purchased power costs established in base rates by regulators and the amount of actual fuel and purchased power costs incurred by Liberty. If costs are less, customers see a credit, and if costs are higher, customers see a charge. Those costs are passed through to customers, and there is no markup for Liberty.
Savings from the conversion to wind will be reflected in future FAC filings, which happens every six months, said Kelli Price, spokesperson for Liberty.
As part of the PSC ruling, Liberty also received approval to implement time-of-use rates beginning Oct. 15. When that takes effect, customers will pay a lower rate for energy used daily during the off-peak hours of 10 p.m. to 6 a.m. Additional optional time-of-use rate structures will be available to residential and small commercial customers this fall.
Liberty said in a statement, “These rate structures are designed to give customers more control over their monthly electric bill.”
The PSC also approved financial assistance programs for qualifying customers, including weatherization, as part of the latest rate case.
Meanwhile, on Thursday, Kansas officials ordered a reduction in the monthly bills of Liberty customers, citing a settlement agreement approved by the Kansas Corporation Commission. It calls for a 3.8% rate decrease effective July 1, or about $2.95 per month for a typical Kansas customer.
Liberty, which has fewer than 10,000 customers in Southeast Kansas, filed an application for a rate increase in Kansas about the same time as it did in Missouri, that would include recovery of costs related to building three new wind farms, retiring the Asbury coal plant, and other costs. The application called for an increase in residential rates totaling about $5 per month.
According to the Kansas Corporation Commission, the recent settlement addressed all matters raised in the application except wind farm costs, about which questions had been raised. On May 6, Empire filed a motion to withdraw its request to recover the wind project costs from the case, with the option to seek recovery in a future general rate case.
Wind farms and more
Liberty 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 produce 600 megawatts of power for the utility and are a key part of its transition to renewable energy.
In 1997, the utility – then 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. Now, 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 and from solar.
The three wind farms represented an overall investment of $1.2 billion, according to Liberty officials, but because there is no fuel cost, utility officials say it will be cheaper for customers in the long term than staying with fossil fuels for electric generation.
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. Liberty filed for the rate request last spring.
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. Last 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. Price said the company has begun working with regulators to build its next solar farm.
The utility also has been upgrading to protecting against the impact of extreme weather and security threats, including expanding substations and adding automated switching to help speed power restoration and limit the number of customers who experience an outage, replacing more than 1,500 deteriorating poles, and reducing outages caused by wildlife by installing approximately 3,000 wildlife guards.
Tim Wilson, vice president of electric operations, said in a statement, “Upgrades to our infrastructure make it more secure and more resilient during extreme weather, which means fewer and shorter outages. Clean, renewable energy helps us to protect our environment while reducing energy generation costs; savings that we pass on to customers. And, updated technology allows us to better serve our customers through convenient billing and payment platforms and to offer options, such as new rate plans and access to near real-time energy usage information, that encourage energy savings and help customers lower their bill.”
Winter storm costs
Still pending before the PSC is a separate first-of-its-kind case to recover rates from the severe winter weather in February 2021.
Under that filing, a typical Liberty customer in Southwest Missouri will pay nearly $800 over the course of 13 years to recover the cost of natural gas price spikes during the winter storm.
Liberty filed on Jan. 19 a request with regulators for what is called a securitization case, allowed under legislation passed last year and signed into law in August by Missouri Gov. Mike Parson. Liberty is the first utility in Missouri to file a securitization case since the law took effect.
The filing would allow the Joplin-based utility to recover more than $200 million stemming from the cost of natural gas acquisition and related charges stemming from the storm.
If the request is approved, that same typical customer, defined as someone using 1,000 kilowatt-hours per month, would pay an estimated additional $5.05 monthly, or $60.60 per year, for 13 years, or $787.80.
Temperatures that fell to as low as minus 15 degrees in Joplin on Feb. 16, 2021, resulted in rolling electrical blackouts and “extreme natural gas spikes in Missouri,” according to the Missouri PSC. That 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 that it reduced production at its gas plants because of supply issues and at its coal plants because of coal freezing up.
Aaron Doll, senior director of energy strategy for Liberty, previously told the Globe that market prices for a megawatt of energy typically average around $20 that time of year but that prices spiked to $4,000 for a sustained multiday period during mid-February of 2021.
This spring, Liberty got approval from the PSC to also include the cost of retiring debt for its Asbury coal-fired generating station north of Joplin in the latest securitization case; the plant has been converted to the Asbury Renewables Operations Center, Wilson said. That is likely to affect the final rates that will be passed on to utility customers.
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