Evergy's 5-Gigawatt Data Center Bet: A Growth Spiral Built on LLPS
Load growth, premium tariffs, and a $21.6B capital plan lift the utility above the valley of rate base lag.
EVRG · Earnings Call · 2026-08-06
A Data Center Wave, Contractually Locked In
Evergy's second-quarter call painted a picture of a utility riding an unprecedented wave of data center demand, but with a twist: the load is largely pre-sold under long-term electric service agreements (ESAs). As CEO David Campbell put it, “we have executed ESAs for 5 data center projects under our LLPS tariffs, securing the strong protections that the tariff requires for current customers.” — David Campbell, President and CEO · 2026-08-06 Those five ESAs alone represent roughly 2.5 GW of steady-state peak load, plus another 500 MW from non-LLPS customers like Panasonic. What stands out is the disciplined structure: minimum monthly bill provisions spanning 16–17 years, effectively converting this large load from an opportunistic win into a contracted cash-flow machine.The pipeline behind it is even more striking. Management disclosed ~2.0–2.5 GW of expansion opportunities at existing sites and another 1–2 GW in advanced Tier 2 discussions. The company expects to sign at least one more new ESA in 2026. “We continue to make progress towards agreements on expansion projects and are highly confident that we'll execute at least one more ESA in 2026.” — David Campbell, President and CEO · 2026-08-06 This is not speculative AI data center chatter—it is backed by land rights, letters of agreement, and the reality that Kansas City sits at the epicenter of EPC talent (Black & Veatch, Burns & McDonnell) and a reliable low-cost power grid.
Our large load tariff framework is well aligned with the principles in the pledge and is designed to ensure that new large customers pay their fair share of the infrastructure and generation costs required to serve them while at the same time helping to protect affordability for existing customers.
Regulatory Innovation: The LLPS Tariff as the Engine
The key mechanism enabling all this is the LLPS tariff (Large Load Power Service). It charges a premium—15% to 20% above standard industrial rates—while guaranteeing that large customers pay their fair share of system costs. In the Missouri Metro rate case, Evergy explicitly reduced the requested revenue requirement by $25 million (about 15%) because of the data center load. “we actually reduced the revenue requirement we would otherwise have requested by $25 million, about a 15% decrease in our requested revenue requirement because of data centers.” — David Campbell, President and CEO · 2026-08-06 That is a tangible, near-term affordability benefit for existing residential customers—a hallmark of the tariff design.The company also signed the White House's Ratepayer Protection Pledge, reinforcing its focus on keeping residential rate increases at or below inflation. The exception is Missouri West, the smallest utility in the system, where rates are expected to rise above inflation for the next five years to fund new dispatchable generation. But even that is positioned as a long-term stability play.
Capital, Rate Base, and the Financial Engine
Evergy rolled out a $21.6 billion five-year capital plan, augmented by ~$1 billion from the 2026 IRPs, pushing the projected rate base CAGR to ~12%. The company reaffirmed its 6–8%+ long-term EPS growth target, with expectations to exceed 8% annually from 2028 through 2030. The key metric to watch is the rate base growth versus EPS growth gap, which management pegs at ~250 basis points. “we expect in our 6% to 8% plus long-term earnings growth target that we expect earnings growth greater than 8% annually starting in 2028.” — David Campbell, President and CEO · 2026-08-06 This is a shared theme in the utility space—big CapEx cycles funded by equity dilution—but Evergy's data center ESAs provide a visibility advantage that most utilities lack.Financial leverage is mounting: total debt is $13.1B, up 6% YoY, and interest coverage has slipped from a peak of 6.4x in 2021 to 1.8x in Q1 2026. Interest coverage fell to 1.8x in Q1 2026, down from a peak of 6.4x in 2021 and a 50% decline over the last 8 years. Management expects FFO to debt to hold at 14–15% through 2028, relying on $700–900M of annual equity raises via its ATM program. The company has no plans for block issuances in 2026—a sign of pricing discipline.
Comparing across quarters, the story is remarkably consistent. On the year-end call, David set the tone: “we expect at least 1 more ESA to sign this year with – that's not in our plan currently.” — David Campbell, President and Chief Executive Officer · 2026-02-19 And Bryan affirmed the balance sheet strategy: “we have no planned equity issuances beyond '29.” — W. Buckler, Executive Vice President and Chief Financial Officer · 2026-02-19 The market's response has been muted—EVRG is down 3.2% over the last 90 days, with a modest 8.2% drawdown from its July peak—but the underlying fundamentals remain sticky: contracted load, premium tariffs, and a utility that is monetizing the AI wave without ceding control to speculative developers.