Evergy, Inc. (EVRG): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at the competitive landscape for a major regulated utility, and honestly, the picture for Evergy, Inc. (EVRG) in late 2025 is a classic tug-of-war. While the company enjoys a strong regulatory shield-evidenced by that 13.99% rate hike Missouri approved in January-the real pressure points are immediate: managing a massive \$17.5 billion capital plan and fending off the growing threat from distributed generation, especially as fuel and purchased power costs hit \$330.4 million in Q2 2025. We've broken down the five forces to see exactly where this utility truly stands, from its low direct rivalry to the high barriers to entry protecting its \$20 billion rate base. Dive in below to see how these forces shape their near-term strategy and investment profile.

Evergy, Inc. (EVRG) - Porter's Five Forces: Bargaining power of suppliers

When looking at the bargaining power of suppliers for Evergy, Inc. (EVRG), you see a dynamic where the company actively works to mitigate dependence through diversification and competitive procurement, especially concerning fuel and major equipment.

Fuel and purchased power represent a substantial operational outlay. For the second quarter of 2025, this significant cost totaled an amount of \$330.4 million.

To counter the price volatility and supply risk associated with any single commodity, Evergy, Inc. maintains a diverse generation mix. This strategy inherently limits the leverage any one fuel supplier can exert over the company's operations.

The current and planned resource portfolio includes several distinct supplier categories:

• Nuclear power, which provides reliable base load generation.
• Natural gas, with new combined-cycle gas turbine (CCGT) assets being added.
• Wind and solar, representing significant renewable energy sources.
• Coal, which is being actively retired or converted to natural gas operation, such as the planned retirement of Jeffrey 2 & 3 by December 2030 for Evergy Kansas Central.

For new generation capacity, Evergy, Inc. leans on competitive market mechanisms. New projects, specifically solar and gas facilities in Kansas and Missouri, are sourced through competitive Request for Proposals (RFPs). This process is designed to put downward pressure on the pricing offered by potential equipment and construction suppliers.

The company's substantial investment pipeline also provides leverage when dealing with major equipment vendors for grid modernization and generation projects. The stated capital plan, which is in the range of \$17.5 billion over a multi-year period, involves massive procurement volumes for items like turbines, solar panels, and grid components. This scale allows Evergy, Inc. to negotiate more favorable terms.

Here is a look at some of the planned resource additions that drive supplier negotiations:

The move toward renewables and gas, confirmed by regulatory approvals in mid-2025, shifts supplier focus from traditional fuel suppliers to technology providers and construction firms, where Evergy, Inc.'s large, multi-year capital commitments offer significant negotiating clout.

Evergy, Inc. (EVRG) - Porter's Five Forces: Bargaining power of customers

You're analyzing Evergy, Inc. (EVRG) and the customer side of the equation shows a clear dichotomy: residential customers have virtually no leverage, while large industrial users possess significant, albeit conditional, power. This dynamic is central to understanding Evergy's revenue stability and near-term growth prospects.

Residential customers have no choice of provider due to the regulated monopoly structure in Evergy's service territories in Kansas and Missouri. This lack of competition inherently suppresses their direct bargaining power over service terms or pricing. Still, their collective voice is channeled through the regulatory bodies.

Rates are set by state commissions, like the Missouri Public Service Commission, which approved a 13.99% rate hike in January 2025 for Evergy Missouri West customers. This specific increase, effective January 1, 2025, translated to an estimated additional $27 per month for an average customer with a $200 monthly bill at that time. The regulatory process is the only formal avenue for residential pushback, as seen by the public comment period for case No. ER-2024-0189.

The total customer base is large and dispersed, at about 1.7 million across Kansas and Missouri. This scale means that while individual residential customers have minimal impact, aggregated customer sentiment, especially when amplified by consumer advocates, influences regulatory outcomes. Here's a quick look at how that base is segmented by revenue contribution, which helps map where the real financial pressure points are:

Large industrial customers hold some power, threatening to self-generate or relocate. These high-load users are actively courted, and their potential departure or demand for customized service agreements creates a real negotiation dynamic. Evergy is managing a substantial pipeline of these large users, which gives them leverage in securing long-term, favorable contracts.

The scale of potential new industrial load underscores this bargaining strength. You see this in the active pipeline discussions:

• 4.6 GW pipeline of 'Tier 1' large load customers being actively built or finalized.
• Two large data center customers have posted USD 200m in financial commitments.
• Total incremental demand being 'actively considered' across service territories is 15 GW.
• Over USD 30m in financial commitments received from a segment of the pipeline awaiting final agreements in 2H25.

For these specific large customers, the threat of self-generation or moving operations to a territory with more favorable terms is defintely a factor in Evergy's integrated resource planning and capital expenditure approvals.

Evergy, Inc. (EVRG) - Porter's Five Forces: Competitive rivalry

Direct rivalry is low because Evergy is a regulated utility monopoly in its service area. Evergy provides power to 1.7 million customers across its operating subsidiaries in Missouri and Kansas. The regulatory environment, supported by legislation like Missouri Senate Bill 4 and Kansas Senate Bill 98, helps solidify this structure, though it involves constant interaction with bodies like the Kansas Corporation Commission (KCC) and the Missouri PSC.

Competition is primarily for capital and investor attention against other large-cap utilities. Evergy has increased its capital expenditure plan by 8% to \$17.5 billion for the 2025 to 2029 period. This investment plan is expected to drive an annualized rate base growth of approximately 8.5%. The company is focused on achieving the midpoint of its reaffirmed 2025 adjusted EPS guidance, which stands at \$4.02 per share, following a narrowing of the range to \$3.92 to \$4.02 as of the third quarter of 2025. The long-term adjusted EPS growth target is 4% to 6% through 2029, with expectations to be in the top half of this range based off the \$4.02 2025 midpoint.

Rivalry exists in securing new large-load customers, such as data centers, for future growth. This competition is fierce, as these projects represent significant, long-term revenue streams. Evergy has outlined a total incremental demand pipeline being actively considered across its territories of approximately 15 GW. The 'Tier 1' pipeline is detailed below, showing active pursuit of massive new load:

The utility has already secured 800 MW of load for customers including Google, Meta, and Panasonic. To manage this demand, Evergy is building its first natural gas-fired power plants in over a decade and its first large-scale solar farm.

The focus on financial performance against peers is clear through the guidance structure. For instance, the third quarter 2025 adjusted EPS was \$2.03 per share, compared to \$2.02 per share in the third quarter of 2024. The company's ability to manage costs, offsetting \$0.10 of EPS benefit against \$0.13 per share in weather headwinds year-to-date September 30, 2025, is key to maintaining that \$4.02 midpoint expectation.

The competitive landscape for these large loads involves negotiating specific rate plans, such as the large load 'power service rate plan' approved in Kansas for new facilities over 75 MW. These agreements often require:

• Minimum monthly bill based on 80% of contract demand.
• A ramp-up period of up to five years.
• A minimum service commitment of 12 years in Kansas or 15 years in Michigan.
• Payment for any necessary transmission upgrades.

KCC staff estimates suggest customers on the large load rate may pay 7% to 10% more than existing industrial customers, which helps ensure existing customers are not subsidizing the new infrastructure costs.

Evergy, Inc. (EVRG) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for Evergy, Inc. (EVRG) as of late 2025, and the threat of substitutes is definitely a major factor shaping their capital strategy. This force looks at alternatives customers might use instead of buying power directly from the regulated utility grid. For Evergy, the primary substitutes are customer-owned generation and efficiency measures that reduce the need for grid power.

Distributed generation, especially rooftop solar paired with battery storage, represents a tangible bypass for retail sales. While specific penetration rates for rooftop solar across Evergy's entire Kansas and Missouri customer base aren't publically itemized for 2025, we see Evergy actively testing grid interaction with these resources. For instance, the Residential Battery Energy Storage Pilot Program, running through July 2025, involves 50 battery energy storage systems. Each participant receives a free 16 kWh home battery system valued at $18,000. This pilot helps Evergy understand how these distributed resources, which can store private generation, interact with the grid, a direct response to customers seeking self-sufficiency.

Large industrial users present a significant substitution risk by developing their own generation capacity, often referred to as behind-the-meter generation. This is evidenced by the massive growth in Evergy's economic development pipeline. This pipeline currently stands at approximately 11.2 gigawatts (GW) of prospective new load, which could nearly double the company's current system peak demand of about 10.6 GW. This demand is heavily influenced by large industrial customers and data centers. The utility is planning for this load, but the very existence of such a large pipeline signals that major customers are making significant, long-term energy commitments, some of which may involve self-generation or direct power purchase agreements outside the traditional retail structure.

Energy efficiency and demand-side management (DSM) programs directly reduce Evergy's overall retail sales growth, which impacts revenue recovery. Evergy has seen success in shifting customer behavior through pricing signals. Their transition to a Time-of-Use (TOU) rate in Missouri was quite effective; within roughly three months, 30 percent of residential customers pre-enrolled in a time-based plan. Furthermore, this education initiative achieved 98 percent customer awareness of new rate options and 90 percent awareness of the required change to time-based plans. While these programs help manage peak demand, they inherently suppress overall volume growth.

To counter intermittency from existing renewables and meet the surging demand from new load, Evergy is heavily investing in firm, dispatchable generation. The company has outlined a $17.5 billion capital plan spanning 2025 through 2029. Roughly one-third of this capital increase, or about 35%, is specifically earmarked for new generation projects. This includes planning for utility-scale solar projects and multiple new combined-cycle natural-gas units in Kansas expected to enter service around 2029 and 2030. For example, specific approved projects include a 107 MW solar farm in Missouri costing an estimated $213.8 million and a 75 MW solar farm in Kansas costing about $128.8 million. The company is also planning 2.1 gigawatts of new resources between 2025-2035 compared to its 2024 plan, including 624 MW of solar resources by 2025.

Here's a quick look at the planned capital allocation toward generation, which is a direct response to the need to maintain reliability against intermittent substitutes and meet new load:

The threat of substitutes forces Evergy to spend heavily on firming capacity. The company's strategy is to invest $17.5 billion through 2029 to ensure the grid can handle both the intermittency of distributed resources and the massive new load from economic development.

The key elements of the substitute threat are summarized below:

• Rooftop solar and battery storage are primary substitutes.
• Pilot battery systems are 16 kWh in capacity, valued at $18,000.
• Industrial bypass potential is signaled by a 11.2 GW development pipeline.
• DSM success: 30% residential pre-enrollment in TOU rates.
• Evergy's counter-investment: $17.5 billion capital plan through 2029.
• New generation spending is about 35% of that capital plan.

Evergy, Inc. (EVRG) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Evergy, Inc. is exceptionally low, bordering on negligible, primarily because the utility sector is characterized by massive, regulated monopolies. You simply cannot start an electric utility tomorrow; the barriers are structural, financial, and legal.

The barrier to entry is extremely high due to the massive capital required for transmission and distribution infrastructure. We are talking about sunk costs that would bankrupt any startup before they even connected their first customer. Evergy, for instance, is planning for significant future investment just to maintain and grow its existing system.

Here's the quick math on the scale of required investment that new entrants must overcome:

The company's asset base, which represents the existing sunk cost, is substantial. While the exact rate base figure you mentioned isn't immediately available, Evergy, Inc.'s total assets stood at \$33.44 billion as of September 30, 2025. That figure represents decades of investment that a new entrant would have to replicate or buy out, which is not feasible.

Regulatory hurdles from the KCC and MPSC create a near-insurmountable barrier for new utilities. These state commissions control who can operate, what rates they can charge, and how they recover costs, effectively granting an exclusive franchise. New entrants would face years of litigation and testimony just to get on the ballot for service territory approval.

Consider the recent regulatory actions that cement Evergy, Inc.'s protected status:

• Kansas Corporation Commission (KCC) regulates monopoly utilities like Evergy.
• KCC approved an 8.62% rate increase for Evergy Kansas Central in 2025 to fund new generation projects.
• The KCC approved new rules for large loads (over 75 MW) requiring minimum monthly payments based on 80% of contract demand.
• The Missouri Public Service Commission (MPSC) is Evergy Missouri West's counterpart, controlling its rates.
• Evergy serves approximately 1.7 million customers across Kansas and Missouri.

New entrants cannot easily compete for residential customers due to the established natural monopoly. The existing customer base is locked in by regulation; you cannot simply solicit a residential customer away from Evergy, Inc. in its designated territory. The utility must file for any rate change, like the recent request for a $196 million increase for its Kansas Central service area. This process is designed to protect the incumbent utility's investment and service obligation, not to invite competition for the existing residential load.