PITTSBURG — Following the recent decision to drop a non-disclosure agreement between the City of Pittsburg and power provider Evergy (formerly Westar) regarding their negotiations over the city’s potential creation of a municipally owned electric utility, more details of what has been going on behind the scenes are emerging.
At Tuesday’s Pittsburg City Commission meeting city staff and commissioners discussed a report from Concentric Energy Advisers that was commissioned by Evergy. Evergy has now made that report available to the public on its website.
The Concentric report presents what it calls “the City Option” and “the Evergy Option.” According to the report, which is over 60 pages long, “the City Option is projected to result in an incremental cost to Pittsburg customers of approximately $60 million over the initial 10 years of municipal utility operation, and approximately $107 million over the initial 20 years of operation. This indicates that municipalization would result in a substantial net economic detriment to the electric customers in Pittsburg over the long-term relative to continuing to take service under the Evergy Option.”
On Tuesday, city officials also discussed a survey commissioned by Evergy last month. Though it has not been on the commission’s agenda at any time, this survey and the way questions on it were framed have been discussed at each of the last three city commission meetings.
“Some of them were a little bit of a concern for us,” Byers said Tuesday. “There seemed to be some leading questions that asked about city services and city commissioners.”
Evergy has also now made those survey questions publicly available.
“What is your opinion of how effective the City Manager of Pittsburg is at his job?” and “What is your opinion of how effective the Pittsburg City Commission is at their job?” were among the questions.
Deputy City Manager Jay Byers described the Concentric study as “an unsolicited report that Evergy had commissioned” on Tuesday.
In an interview Wednesday, however, Evergy Chief Customer Officer Chuck Caisley offered a somewhat different explanation of the report.
“We commissioned the report directly in response to a number of questions that they had asked us months and months ago and in an effort to be as thorough as possible,” Caisley said.
He also said that since Evergy commissioned its study “we have offered — actually we’ve requested three times in writing — to come before the city commission and present the study, as well as answer questions about both the study and the survey that we conducted of the residents of Pittsburg with respect to what they thought of our service quality and what they thought about municipalization. And so far we have either been denied the ability to come in front of the commission or we simply haven’t been answered by the city manager’s office.”
In response to these comments, Byers on Thursday said while the city did have many questions for Evergy, the company had answered most of them before providing the city with the Concentric report, which contained a lot of additional information the city hadn’t asked for, some of which contradicted other information Evergy had previously provided.
“Like the customer count was different in that report than the number that they gave us previously,” Byers said, “so we weren’t sure what to make of that report.”
As far as presenting its report at a city commission meeting, Byers said Evergy was welcome to speak in the public input period of any commission meeting, just like any member of the public can.
“We don’t stop people from coming to our commission meetings, so they can do that,” Byers said. He noted, however, that Evergy wanted to specifically be put on the city commission’s meeting agenda, but said this would be inappropriate.
“We put things on things on the city commission’s agenda when there are decisions to be made,” Byers said. “There’s no decision in front of the commission right now whether or not to move forward with an electric utility.”
During the public input period of city commission meetings, however, speakers are not typically given the chance to respond to questions from commissioners. The commission also regularly puts special presentations on its agenda which require no action to be taken other than for the commission to “receive for file.”
Asked whether he thought Evergy representatives should be given the chance to answer questions from the commissioners about the company’s study and survey at a city commission meeting, however, Byers said this wouldn’t be appropriate at this time.
“It’s a little early yet,” Byers said. “I mean, we’re way far away from making a decision.”
Byers said the commissioners should have the chance “to consider all the sides of this, and we intend to look into all sides of this,” but Evergy “have an interest here, and I think we all get that,” Byers said.
“We’re not just going to take what Westar gives us as information, we have to find that out on our own, we have to find some, you know, neutral third party. We’re going to get outside information to tell us some of the numbers we need to know,” he said.
“We’re trying to deal with information that we can get as independently as possible.”
On Wednesday, Byers provided a copy of a five-page letter responding to the Concentric report from one of the city’s own outside consultants, GE Warren Associates, on its municipalization study to the Morning Sun.
“In its high cost scenario, Concentric concluded that the 20 year present value loss to the City would be $198.6 million as compared to a continuation of Evergy service,” the letter notes in part. “In its low cost scenario, Concentric concluded that the 20-year present value loss to the City would be $21.4 million. As you will recall the preliminary feasibility analysis prepared by GE Warren Associates (GEW) last year concluded that the 20-year present value benefit to the City would fall in the range of $83.3 to $101 million and that the acquisition would result in an internal rate of return of 9.6% which would significantly exceed the City’s cost of money to finance the acquisition (e.g. ~ 5.5%.) The two analyses reached completely opposite conclusions.”
In GEW’s opinion, “the major assumptions made by Concentric are flawed and are intentionally made to lead the reader to a biased and flawed conclusion that municipalization would be a losing proposition for the City,” the letter notes in its concluding section. “More accurate assumptions lead to the opposite conclusion and the City should therefore continue to vet municipalization.”
Caisley said Wednesday, however, despite the business Evergy would lose if Pittsburg municipalizes, that the company is attempting to present the city with as realistic numbers and information as it can.
“The city manager has repeatedly characterized this as us trying to win, or Evergy and Westar trying to beat the City of Pittsburg,” Caisley said. “Nothing could be further from the truth. We simply want transparency.”
Pittsburg declining to allow Evergy to give a scheduled presentation at a city commission meeting about its report, Caisley said, was the reason for dropping the non-disclosure agreement. The company decided to post the study and survey to its website “so that anybody in Pittsburg can have access to the information that the city manager and his office have had for weeks and weeks now.”