KANSAS CITY, Mo. — Evergy more than doubled its earnings in the first quarter compared to the beginning of 2020, largely due to the profits it made on sky-high wholesale energy prices during a February cold snap that forced it to cut off power to thousands of customers across the region.
The utility, which serves 1.6 million customers in Kansas and Missouri, announced the earnings to investors and filed its quarterly report with the Securities and Exchange Commission on Thursday. It said it made $192 million in earnings between Jan. 1 and March 31, compared to $69 million during that timeframe in 2020.
It attributed the bulk of that to margins on non regulated energy sales, something it said in its report has “historically not had a significant impact on the Evergy Companies’ results of operations.” Because of the high prices during that February cold snap, that part of the business alone brought in $96.5 million in profits, the company said.
Sustained, frigid temperatures in February drove demand for energy sky high as power generators, such as natural gas plants and wind turbines, failed to supply enough power and the regional grid struggled to keep up. Evergy, and other providers in the Southwest Power Pool, used rolling blackouts affecting thousands of customers across the region to keep the grid from becoming unstable.
During that time, energy prices, especially for natural gas, shot up, bringing a spike of profits to parts of Evergy’s business.
According to the earnings report, Evergy’s profits on retail customers did not see a spike because of the cold snap.
Evergy, too, had to purchase energy at high prices during the cold snap. In the report, it said it incurred $341 million in natural gas and power purchase costs after revenues. But the company is allowed to defer increased fuel or power purchase costs. As of March 31, the company said it had deferred “substantially all of the fuel and purchased power costs, net of wholesale revenues, related to the winter weather event.”
“While the Evergy Companies expect to recover substantially all of any increased fuel and purchased power costs related to the winter weather event from customers, the timing of the cost recovery could be delayed or spread over a longer than typical recovery timeframe by the (Kansas Corporation Commission) or the Public Service Commission of the State of Missouri … given the extraordinary nature of the winter weather event and to help moderate monthly customer bill impacts,” the company said.
On a conference call with investors, president and CEO David Campbell, said the company was pursuing that option in both states. He called the cold snap the “most intense and sustained extreme weather event that we’ve seen in decades,” noting the $341 million spike in Evergy’s costs for natural gas and to purchase power.
He said legislation in Missouri designed, primarily, to help ease the financial hit for utilities to shutter coal plants before the end of their useful life could also help recover costs from the cold snap over time.
Evergy expects to have a clearer sense for how long it will take to recover those costs later this year, Campbell said.
“We’ll be working with our regulators on constructive solutions to smooth the periodic effect of these extreme weather-related costs for our customers,” said Kirk Andrews, executive vice president and chief financial officer.
In a release earlier Wednesday morning, he said the company was “off to a solid start in 2021.”
“Our team continues to execute – delivering strong financial results in the first quarter and advancing several key regulatory and legislative objectives,” he said.
Evergy’s stock, which trades on the New York Stock Exchange opened at $63.85 per share on Thursday.