Archive for Wednesday, December 28, 2005

Westar rate action due today

Utility has asked for increase of $84 million

December 28, 2005


— More than 650,000 customers of Westar Energy Inc. are supposed to learn today whether their electric rates will increase, though their power bills already are likely to fluctuate more than in the past.

Westar, the state's largest electric utility, has asked the Kansas Corporation Commission to increase its annual rates by $84 million and to grant permission to pass its fuel and environmental costs directly on to consumers. State law gives the three-member commission until today to issue a decision.

Commissioners haven't disclosed how much profit they'll allow Westar to earn as a regulated monopoly. But its members have publicly endorsed Westar's proposals on fuel and environmental costs.

Earlier this month, an attorney for the Citizens' Utility Ratepayers Board expressed concern that the commission was headed toward increasing Westar's rates. Both the commission's staff and CURB, which represents residential and small-business customers, recommended a cut in Westar's rates.

"We're still concerned about it," CURB attorney Niki Christopher said Tuesday, adding that the agency wants to encourage Westar to keep operating as it has since former Chief Executive Officer David Wittig left in December 2002.

Breaking news

Westar's decision will be posted at soon after it is announced today.

After Wittig resigned, Westar abandoned a strategy adopted in the mid-1990s of diversifying its businesses. Under KCC pressure, the company sold almost all its nonutility assets and cut its debt from $3.6 billion to $1.7 billion.

Earlier this year, a federal jury convicted Wittig of looting Westar while serving as its top executive.

Westar officials have said they need additional revenue to cover rising costs of doing business and to maintain customer service programs. They've declined to speculate on how the commission might rule.

"It would inappropriate to discuss the order until we actually have it," company spokeswoman Karla Olsen said.

A key issue for the KCC is the profit Westar should be allowed to earn. The company has argued that an 11.35 percent profit is reasonable; CURB's figure is 8.75 percent.

Westar's proposals would increase rates 9 percent for 352,000 customers in its northern region and about 6 percent for 303,000 customers in its southern region.

In the north, the average residential customer would pay $5.28 more a month, or about $63 annually. The region includes Lawrence, Atchison, Emporia, Leavenworth, Manhattan, Olathe, Salina, Topeka, Hutchinson and Parsons.

The south includes Arkansas City, El Dorado, Fort Scott, Independence, Newton, Pittsburg and Wichita. There, the average residential customer would pay $4.58 more a month, or about $55 annually.

Allowing Westar to pass fuel and environmental costs on to customers would be a significant change in how the company is regulated. Previously, the KCC has set overall rates, and Westar has had to absorb unanticipated costs.

Critics contend Westar is shifting its risk to consumers. Westar has said customers' bills shouldn't fluctuate significantly, but consumer advocates worry they'll be as volatile as natural gas bills.

"I think you'll see that volatility come into play more in the summer," CURB's Christopher said.

In trading Tuesday on the New York Stock Exchange, shares of Westar closed up 7 cents, at $22.22. Westar shares have traded in a 52-week range of $21.07 to $24.97.


Ragingbear 11 years, 11 months ago

Actually, compared to many other areas of the country that I have lived in. Westar is rather cheap in comparison. Around here, I pay about $40 in a really hot month that just cooks you. In comparison, I have seen $100 for the same amount of power.

I am not in support of a rate hike, but I am not completely against it. I do have a problem, however, that this rate comes right after the entire Westar scandal. I just feel that we are being forced to pick up thier legal tab, and then give them some extra moola for thier solid gold jacuzzi.

Kathleen Christian 11 years, 11 months ago

Well that's just fine and dandy Ragingbear, but - are wages going to increase for the working class who is already struggling to cover rent and utilitiels - now that utiliities are on the rise, along with postage rates, gasoline, etc. etc. etc. - Another step in keeping the working class down. Come on the working class have to live too. It would be nice to just have a few bucks left over for a movie or that extra goody on the grocery list.

Ragingbear 11 years, 11 months ago

I don't know about you, but last I checked, if you could afford to go to the movies, then you were middle class. With $15 tickets and all.

I am the lower class. I don't like it anymore than the next guy, but the fact that the poor are getting crapped on is not my fault. Blame the people in charge.

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