Evergy : 2024 Kansas Capital Structure & Return on Equity Policy Workshop
EVRG
Capital Structure & Return on Equity Policy Workshop
November 20, 2024
Internal Use Only
Presentation Agenda
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Capital Structure and ROE Workshop Background
HB 2527 is supportive, enabling legislation creating opportunities for additional investment by Evergy in Kansas. While positive for investors, concerns remain after the 2023 Evergy Rate Case as to whether Kansas will have competitive frameworks for capital structure and ROE
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Importance Of Kansas ROE And Capital Structure Competitiveness
In Evergy testimony in front of the KCC in support of the 2023 Kansas Rate Case settlement, Evergy's witness stated,
"while resolved for purposes of this case, there remain some disagreements as to foundational policy issues that Evergy intends to continue to work on with the Parties after this proceeding. The
Company's goal is for Kansas to have policies in place that are supportive of economic development and growth opportunities for businesses and individuals in our state. To help advance those objectives, utilities in Kansas must have the financial strength and flexibility to be supportive partners in achieving these positive outcomes for Kansas. We will be engaging with stakeholders to create clarity that utilities in Kansas are afforded opportunities to maintain their financial strength consistent with industry peers with which we compete for financial investment."
Competitive frameworks for capital structure and ROE are critical enablers of continued infrastructure investment for the benefit of Kansas customers and economic growth
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Regulatory Environment Evaluation After HB 2527
As companies compete for financing to fund economic development, investors' evaluations consider long-term return prospects which are rooted in expected regulatory outcomes
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Hope And Bluefield Standards
A fair and reasonable return satisfies all three of these standards
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Ratemaking Capital Structure - The "Stand-Alone Principle"
If all three tests are met, the operating company's capital structure is deemed most
appropriate for ratemaking purposes
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Background Takeaways
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Economic Development
and Infrastructure
Investment
Speaker: Darrin Ives
Economic Development Opportunity
Total US Manufacturing Construction Spending
Total US Manufacturing Construction Spending By Sector
2021-present: 42.4% CAGR
The US is experiencing a renaissance in development of its domestic industrial economy, primarily driven by AI and cloud computing data centers and advanced manufacturing
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Disclaimer
Evergy Inc. published this content on November 21, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on November 21, 2024 at 04:11:06.091.