Electricity's Cost Drivers

Many factors drive the cost of providing electricity to our customers, including the cost to generate and deliver it.

Electricity rates reflect a number of components, including fuel costs, transmission, facility investments and environmental compliance. The prices paid for these components vary over time; the costs to install and operate other components represent additional operational expenses. As these are incorporated in rates through a rate case, or passed through to the customer via a bill rider, prices will fluctuate. Below are some common drivers of price change. 

Fuel Pricing

We rely on a diverse energy mix to generate electricity.  

  • The market costs of these energy sources vary seasonally, daily and even hourly.
  • Coal, our primary fuel source, is historically more price stable than other types of fuel, like natural gas or oil, but is still subject to variability.
  • Fuel costs include transportation costs to bring fuel to power plants, primarily through the railroad.

Generating Facility Investments

These investments ensure we follow environmental regulations while also ensuring appropriate capacity to meet customer needs at an affordable price. Recent additions and improvements include: 

  • The Spearville Wind Generation Facility, the first utility-owned wind power facility in Kansas.
  • Power purchased from three other wind and hydro-electric facilities.
  • Environmental upgrades for La Cygne Generation Station and completed upgrades at Iatan 1 Generation Station.
  • Construction of Iatan 2, one of the cleanest coal-fired power plants in the United States.

Grid Modernization

It’s necessary to provide constant maintenance and upgrades of our electric infrastructure. 

  • The grid needs constant upkeep to maintain safe, consistent service.
  • Upgrading the grid improves reliability and helps reduce outages related to aging infrastructure.

Transmission Costs

Building additional transmission capacity is necessary to ensure that electricity gets from the generating plants to the customers who require it.
  • Additional capacity reduces congestion for continued reliability.
  • Access to remote renewable energy sources such as wind require additional transmission lines to deliver the energy.

Other Factors

A variety of other factors also affect the cost of electricity, including: 

  • State and federal environmental air quality mandates
  • State renewable energy standards
  • Cybersecurity requirements, OSHA regulations and new reliability standards
  • Inflation in the price of goods and materials
  • Additional taxes or fees levied by others and passed through to the customer on the electric bill
Review KCP&L’s recent rate pricing history

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