Ingram’s January 2023

Q&A ... W ith B ill J ohnson The CEO for the region’s largest municipally owned power company—the Kansas City Board of Public Utilities—addresses current energy trends and their impact on business and industry. Thought Leader Insights: Trends in Energy

Q: It’s been a wild ride in the energy markets since February last year and Mr. Putin’s excursion; what’s your assessment of the U.S. energy sector overall, and how well-positioned is it for stability in 2023? A: Before Ukraine, it was somewhat of a roller coaster, throughout COVID-19 and that period before Ukraine. We expect all of our prices, the whole sector, to be somewhat elevated above the pre-COVID and Ukraine levels. We do see some things stabilizing over the balance of the year. The international market is playing a huge role in how we recover from the stress on fuel and energy prices in this country. We do see us getting past this at some point, with things becom- ing stable in the domestic market as we find new supplies. A: Our national oil reserves are being restocked, and I hope we get back to more stable gas and oil prices. As long as we don’t get too long of a winter, gas prices should be stabilizing; there’s been a lot of pressure on gas markets. As we look further out, things are more optimistic. A: Our rates are what they are as far as base rates to the community. We do have variances in bills for the costs of purchasing power when we go to the market. Because of that volatility, customers are not immune; they see those changes. But with a diverse fuel mix in our own generation, that shelters us in our community a bit. Those utilities that depend 100 percent on the market are really more at risk than we are. Our genera tion mix softens that blow, it has continued to serve us well and I expect that will con tinue to be the case. We’ve been able to put a lot of energy into the market, even as we buy back from the market. That exchange has proven to be beneficial for both the utility and the community. Q: What’s the outlook for that—new supplies? Q: That’s the national framework; what’s the local picture look like?

Q: Can you reflect for a bit on the dif ference between municipal and investor ownership? What are the key distinctions, and do any of those eventually show up in power rates? A: Municipal ownership is part of it. I think we’ve also done a good job of managing this utility from a cost perspective, working hard to keep costs low. We do serve an economically challenged community, and that is not lost on anyone at this utility. So we operate as efficiently as we can, keeping our customers in mind. The other thing that differentiates us, being publicly owned, is that in addition to keeping prices low, we provide a lot of services back to the community, and those go a long way to help in sustaining the community, local government, and the citizens who live here, as opposed to investor owned utilities, who are also concerned about profits and returns to investors. Q: The sector overall is heavily regu lated; does that also produce differences based on the ownership structures? A: We’re not as regulated as much as the investor-owned side of our business. Having said that, we are governed by a board of directors whose members are selected from the citizens in our community, so they have a vested interest in making sure our operations are where they need to be, along with management. And a vested interest in making sure our service is best in class. We provide a lot of support to the city-county Unified Government, and those services go back to the community to help as a whole and take the pressure off the UG in terms of the services they may have to offer. But strictly compared to investor-owned, we are more entrenched in making sure services are what they need to be and managing cost control. Q: You’re tied into a regional power grid that you don’t control—do you have any concerns about the broader infrastructure through which you’re transmitting and receiving power outside of your own assets?

A: We’re connected throughout the region and state electric system, so we bring power in and export power out to the grid across the Midwest, and that’s important because other systems are also using our system to take power from one location to another, not just the BPU and the BPU grid. Maintaining that connectivity is important. We also have ties to neighboring utilities, not as much on the electric side but with water sources and supply. We have wholesale customers and send water out to those communities who depend heavily on having that water available to them 24/7. Q: Now that we’re talking water, can we address the longer-term supply chal lenges and, for the near term, any concerns with the effects of a prolonged drought? A: Not so much for us. We all know what’s going on in the state of Kansas with the situation farther out west. But the BPU is very fortunate to have an abundant water supply. We take our supply from some huge aquifers underneath the Missouri River. Not the river water itself but wells that go 90-100 feet under the river. That helps us maintain adequate supplies—they are not subject to impact from flooding or other things you might normally see with the river itself. That abundance of supply protects our communities from working through drought situations that come with reservoirs, rivers, or other places that utilities will draw from. We feel very fortunate to be in a much better place to have the supply systems we have. We also have the adequate storage capacity to get through short-term disruptions. Q: Is the water table in local aquifers facing the same kinds of issues the Ogallala has for irrigation in western Kansas? A: No, not as far as we can tell. Going back to the 1993 floods, there were a number of issues that made us go back and rethink things and ask, “How do we ensure more stable supplies in the future?” We were very fortunate to locate the new sources we have,

60 I n g r a m ’ s

January 2023

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