Q2 2024 Summary
Published Jan 10, 2025, 5:10 PM UTC- Evergy expects significant demand growth, increasing from 0.5%-1% to 2%-3% through 2028, driven by new large customers like Google, Panasonic, and Meta, each representing approximately 750 megawatts, and an active pipeline of projects totaling over 6 gigawatts. , , ,
- The company plans substantial capital investments of $12.5 billion through 2028 to support this growth, and does not anticipate issuing new equity through 2026, indicating strong financing capability and confidence in earnings growth without shareholder dilution.
- Evergy is positioned to benefit from economic development tailwinds in their region, with supportive regulatory frameworks, allowing them to add new loads and spread fixed costs, enhancing their growth prospects.
- Regulatory uncertainty in Kansas due to capital structure discussions: Evergy plans to conduct a workshop with Kansas regulators to discuss capital structure issues outside the usual rate case process, introducing uncertainty about future authorized equity ratios and returns. ,
- Potential equity issuance beyond 2026: While Evergy states that no new equity is needed through 2026, there is ambiguity about financing plans beyond that period. Increased capital expenditures may require equity issuance after 2026, potentially diluting existing shareholders. ,
- Frequent rate case filings could increase regulatory risk: The company expects to file rate cases roughly every other year, and possibly more frequently in some jurisdictions. This frequent cadence may lead to increased regulatory scrutiny and uncertainty, potentially affecting earnings stability. ,
-
Data Center Load Growth
Q: How will data center projects impact demand and CapEx?
A: Management noted that projects representing more than 6 gigawatts are in active discussions, including data centers like Google, Panasonic, and Meta. These projects will contribute to a 2% to 3% weather-normalized demand growth through 2028, with momentum building from 2024 onwards. -
Capital Expenditure Update
Q: What should we expect from the upcoming CapEx plan refresh?
A: In the third quarter, management will update the CapEx plan to reflect the Google announcement and the new IRP. They will also discuss the financing plan and rate base growth, covering the full 5-year period. -
Financing Strategy
Q: Will there be changes to the equity issuance plans?
A: Previously, management expected no equity issuance through 2026 based on a $12.5 billion capital plan. With the upcoming capital plan update, they will update financing expectations through the 5-year period, potentially implying equity needs beyond 2026. -
Kansas Rate Cases Outlook
Q: What's the outlook for upcoming Kansas rate cases?
A: Given the typical cadence of every other year, management anticipates revisiting Kansas rate cases next year, in 2025. This supports investment levels and maintains predictability for customers. -
Capital Structure Workshop Purpose
Q: What's the purpose of the upcoming Kansas capital structure workshop?
A: The workshop aims to discuss how Kansas can attract capital competitively, outside of a litigated proceeding. It's expected to occur in the fourth quarter before the next rate case. -
Rate Tariffs for Large Loads
Q: How will rate tariffs address large new loads?
A: Management plans to leverage existing tariff structures to ensure rates reflect incremental costs from large loads like data centers. They aim for a fair approach that benefits all customers without shifting burdens. -
Missouri Legislative Environment
Q: Does the inability to extend PISA impact Missouri plans?
A: The current IRP includes new generation like natural gas plants under existing mechanisms. While a PISA extension would be helpful, management expects to advance the dialogue in the next legislative session and doesn't anticipate immediate impacts. -
Demand Growth Timing
Q: Is demand growth back-end loaded towards 2027-2028?
A: Yes, the ramp-up of projects like Panasonic, Meta, and Google will build momentum from 2024 through 2028, contributing to the 2% to 3% demand growth. -
Earnings Growth Expectations
Q: Why maintain a 4% to 6% growth rate despite positives?
A: Management acknowledged positive dynamics like economic development opportunities but noted factors like the timing of rate cases and financing strategies. They aim to systematically work through their plan without getting ahead of regulators and stakeholders. -
IRP Updates
Q: Will there be supplemental IRP updates as loads materialize?
A: Yes, management plans annual updates to the IRP to reflect new loads and changes in demand.