Archive for Wednesday, June 18, 2003

Ratepayers seek Westar audit

Group worried about health of utility operations, aircraft costs

June 18, 2003


A ratepayers group is seeking a new investigation of Westar Energy to insure the company's bread-and-butter utility business was not damaged by former CEO David Wittig.

The Kansas Industrial Consumers group also is asking the Kansas Corporation Commission to investigate whether Westar officials have underestimated -- perhaps by nearly $2 million -- the company's costs for hundreds of personal trips by Wittig and other officials on corporate aircraft.

Jim Zakoura, an attorney with Kansas Industrial Consumers, said he would file a request today asking KCC, the state's chief utility regulators, to conduct a thorough management audit of Westar.

"The new management appears to be much better and much more ratepayer focused, but we need to be assured that the company did what was best for the utility at all times," Zakoura said.

Jim Haines replaced Wittig as CEO in November, and the company last month completed an internal investigation that alleged widespread abuses of power by Wittig.

Zakoura, though, said the company investigation largely focused on issues related to shareholders. Now, he wants a probe to determine whether Westar properly maintained its power plants and had an adequate number of employees to carry out its utility operations.

Zakoura said the audit could be useful in future rate cases that Westar brings before the KCC. Zakoura's group has contended Westar electric rates are too high.

David Springe, consumer counsel for the Citizens' Utility Ratepayers Board, said his agency also had concerns about whether Westar had adequately maintained its utility operations.

"We don't have direct knowledge, but we do have some suspicions that they may have laid off more people than necessary to cut costs, and we're suspicious about whether they have kept up on plant maintenance given they were trying to cut so many costs," Springe said.

Karla Olsen, a spokeswoman with Topeka-based Westar, said the company was confident its utility operations have been run properly.

"Our utility operation has always been excellent," Olsen said of Westar. "That is what we do best."

Olsen also said the company likely would ask the KCC to deny the request for a management audit.

"We believe the special committee report was thorough and comprehensive," Olsen said. "We're addressing the pertinent issues and following through on the report's recommendations."

Zakoura said parts of the company report were clearly incomplete. He said the company's investigation into the use of company aircraft for personal use "vastly underestimated" the cost to the company.

Westar is seeking about $700,000 in reimbursements for improper use of company aircraft. Zakoura said his group had reviewed flight logs for company flights between 1999 and 2002. He estimated the company should seek at least $2.5 million in reimbursements.

Olsen said Westar officials had not seen how Zakoura reached his estimate but believed their estimates were accurate.

Zakoura also wants the KCC to investigate whether Westar paid a "greatly inflated" price for Protection One Europe in 2000 when the company bought the monitored security business for $225 million.

Westar, the state's largest utility, supplies electricity to 640,000 Kansas customers, including in Lawrence. It operates a power plant north of the city.

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