Topeka — Public hearings have been scheduled in Western Resources' request for a $151 million increase in electric rates; an increase that would raise rates for KPL customers by an average of 19 percent.
Western is the parent company of KPL, which provides electricity in Lawrence and much of northern Kansas.
Western Resources is proposing a 19 percent rate hike for KPL electric customers and 10 percent for its KGE customers. Western operates the KPL plant northwest of Lawrence.
Western also is seeking a 10-percent rate increase for its KGE division, which serves customers in central and southeastern Kansas.
The request is before the three-member Kansas Corporation Commission.
Western officials say the increases are needed to recover increased operating, maintenance and fuel costs, and to cover the cost of new power plants and meet the growing demand for electricity.
And the company notes that its rates haven't increased since the 1980s.
"Very few companies offer products and services at the same prices today as they did in 1983 or 1989," said David Wittig, who is Western's president, board chairman and chief executive.
But residential and business ratepayers say it's more complicated than that.
They say that Western has been earning more than it should have as a regulated monopoly. And, they say, ratepayers have been subsidizing Western's poor management decisions in trying to diversify into other businesses.
"Our analysis is that the company is over-earning and its rates should be rolled back," Walker Hendrix, consumer counsel for the Citizens' Utility Ratepayer Board, said.
Hendrix said his office has yet to determine how much the rates should be lowered, but will recommend a figure by April 6.
The average bill
If Western gets its wish, the average KPL residential customer bill will increase $9.25 per month, from $47.41 to $56.66, according to Western estimates. The average bill for a home in KGE's territory will increase $6.50 per month, from $65.19 to $71.69. Bills will vary, based on the amount of electricity that is used per month. Also, if state utility regulators approve a rate increase, they will then determine how the rates will be spread among the various classes of customers.
Western says the disparity in the increases between KPL and KGE is necessary to offset costs for new power generation for KPL customers, which includes two turbines at the Gordon Evans plant and a new power plant near Joplin, Mo.
But Hendrix maintains neither KPL nor KGE should get an increase.
Western's cost of borrowing has decreased and it has new revenues from demand that has increased more than 20 percent over the last 10 years, he said.
Hendrix, however, said one of his major objections to the proposed rate hike is that KPL and KGE customers are paying for Western's business errors, including its purchase of Protection One, a security company which has had a rough financial history.
Western officials say that none of Protection One's problems are included in the rate-hike request.
"Those books are separate," said Kim Gronniger, a Western spokeswoman. "Ratepayers are not subsidizing any unregulated investments."
Financial problems at Protection One last year helped kill a proposed merger between Western and Kansas City Power & Light Co.
Recently, Public Service Co. of New Mexico announced its intention to buy KPL and KGE. Under the deal, Western will reorganize its non-utility assets, including Protection One and 45 percent investment in ONEOK, a natural gas company, and spin it off to its shareholders.
Public Service Co. of New Mexico has opened a small office in Topeka near Western's headquarters and the Capitol building.
"We're here for the long haul," said Crystal McClernon, a spokeswoman. "We want to be in the community and start finding out what Kansas is all about."
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