Topeka — The cost of country club meals and fitness club memberships are among some of the expenses that Westar Energy Inc. is seeking to recover in its request for an $84 million rate increase.
Jim Ludwig, vice president for public affairs for Westar, said the state's largest electric utility should be compensated for those expenses because they are part of the cost of doing business.
But consumer advocates and staff members of the Kansas Corporation Commission challenge that proposal, saying those costs have little to do with benefiting ratepayers.
"You have enough of those smaller adjustments and they add up," said Susan Cunningham, general counsel for the KCC.
Westar's $84 million request would increase rates 9 percent for 352,000 customers in its northern region, which includes Lawrence, and about 6 percent for 303,000 customers in its southern region. Westar also wants consumers to pay for rising costs for fuel, transmission and complying with environmental regulations.
The three-member KCC has until Dec. 28 to issue a decision, although it is expected to rule earlier.
In the mountain of testimony filed in the case, the Citizens' Utility Ratepayer Board objected to allowing Westar to recover $9,390 for membership costs at the Topeka Country Club and $8,150 in fitness club memberships through rates charged to customers.
Ludwig, with Westar, said the company wasn't seeking recovery of membership dues at the country club, but rather expenses the utility incurred there when having business meetings with customers. Westar is seeking recovery through rates of the fitness club memberships, he said.
"That's a reasonable thing," Ludwig said. He said meals at the country club were incurred while conducting business, and the fitness dues may in the long run lead to reduced health care costs for the company.
Cunningham disagreed.
"We feel like those types of activities benefit the company but not necessarily all of its ratepayers," she said.
There are other disagreements: Westar is claiming $3.47 million in expenses for pursuing the rate case. CURB's expert witness Andrea Crane called that amount "astronomical" and said the figure should be reduced to $2.5 million. The KCC staff, however, didn't disagree with Westar on that point.
Westar is claiming $232,014 for legal expenses relating to an investigation by the Federal Energy and Regulatory Commission, according to CURB. Crane and Cunningham argued ratepayers shouldn't have to pay for those expenses.
Westar has put in for additional costs to comply with the federal Sarbanes-Oxley Act, which requires greater corporate disclosure of accounting practices. Again, opponents of Westar's rate increase say the additional costs are one-time expenses that shouldn't be built into the rate base.
The utility also is claiming as part of its rate request $514,250 in dues to the Edison Electric Institute, according to CURB.
Crane said 25 percent of those dues should be disallowed because that amount is dedicated toward legislative advocacy or lobbying.
"Regulatory agencies generally disallow costs involved with lobbying, since most of these efforts are directed toward promoting the interests of the utilities' shareholders rather than their ratepayers," she said.
Small items?
The meals at the country club and such items are small potatoes when compared with the overall $84 million rate request.
Still, Cunningham said, "It is worth our due diligence to look into these costs. We feel like it is our job to make sure that the company is allowed to recover the just and reasonable cost of providing service."
The KCC staff has recommended an $11.1 million increase in the north territory but a $41.5 million decrease in the south, for an overall reduction for Westar.
CURB recommended a $5.9 million decrease in the north and a $42.1 million decrease in the south.
Under Westar's proposal, the average residential customer in the north would pay $5.28 more a month. The region includes Lawrence, Atchison, Emporia, Leavenworth, Manhattan, Olathe, Salina, Topeka, Hutchinson and Parsons.
Westar's southern region includes Arkansas City, El Dorado, Fort Scott, Independence, Newton, Pittsburg and Wichita. The average residential customer there would pay $4.58 more a month.
Comments
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mssking1 (anonymous) says…
let them take their lunches at McDonalds and go to the public gyms like i do
concerned_citizen (anonymous) says…
Corruption AND a sense of entitment. You could mistake them for politicians.
jranderson (anonymous) says…
Who pays for the meals I eat while doing business? Oh wait, I have no one to gouge.
just_another_bozo_on_this_bus (anonymous) says…
After the Wittig and Lake debacle, they also shouldn't be allowed to pay executives anything more that a lineman's salary. The skill and expertise required to be an executive are certainly no greater than that required of a lineman, and linemen (and linewomen) put their lives on line daily, which can't be said for an executive.
redmorgan (anonymous) says…
Ridiculous! I wish I could eat at the country club! These people should all go to jail.
pylon25 (anonymous) says…
The argument about paying executives the same as a lineman is absurd. The skill and knowledge required to properly run a company of that size is far differnt than that of a lineman. Granted they dont put their lives on the line, but they put in long hours and work hard. Paying an executive "lineman" rates will get lineman quality executives, which would probobly drive the company into the ground. Executives are paid well to attract good people, it needs to stay that way, especially when a bad one could affect so many people. Now, i'm not endorsing covering their country club expenses and such, just refuting the idea of paying them very little.
just_another_bozo_on_this_bus (anonymous) says…
Linemen get paid quite well, too, but it's because they also have to put in long hours and work hard and also put themselves in mortal danger under difficult conditions (thunderstorms, ice storms, late nights, etc.)
Corporate executive salaries have become obscene, and well exceed levels necessary to attract good people. The only reason they are at current levels is because they are determined by boards of directors made up of other executives and former executives, who all incestuously agree that each of them should be making obscene amounts of money.
They then ship off all the jobs to slave labor in other countries in order to finance these salaries. If they can't do that they go running to the KCC complaining that they need rate hikes.
Spoken1 (anonymous) says…
"Paying an executive "lineman" rates will get lineman quality executives, which would probobly drive the company into the ground"
What are you trying to prove? Have you even heard of Wittig? hmmmm....
Centrist (anonymous) says…
Cap ALL Executive salaries at $500,000 per year - period. Who can seriously justify anything higher than that??? I'm bloody sure I could "live on it" just fine ... as it is now, our 3-person household lives on about $27k a year, in take home pay. We pay a mortgage, bills, car payment, insurance, you name it. And no expense reimbursement - NONE. Greed is out of control ...
nlf78 (anonymous) says…
I don't think that most of the "ratepayers" in Kansas get to eat at country clubs or if they belong to a gym, they are not getting reimbursed by their companies for the expense. I think, after everything that happened with Wittig and Lake, there is NO way they can justify raising their rates. Especially for reasons as trivial as these. And most of their customers don't have a CHOICE in their utility providers which is just another way they are monopolizing along with price gouging!!
loboda (anonymous) says…
Whoa!!! I do not believe for one micro-minute it is the responsibility of the ratepayers to pay for unnecessary luxuries that the Westar execs say are needed in order to do business. That's a bunch of cra#!#. There is no need to carry out business at expensive lunches, dinners, or in expensive gyms. Isn't that why one has an office and a telephone and a computer? You execs at Westar need to get off your high horses and stop this corruption. Maybe Westar could keep the fees lower if all you execs would do your business like I stated above. There is no EXCUSE for wasteful spending, just so you guys can have a good time at the expense of the ratepayers. And that is exactly what it is-wasteful spending. Get over yourselves, execs.
dviper (anonymous) says…
It seems that a good house cleaning of executives in the mold of Wittig and Lake needs to occur. The first person to go should be Ludwig and all other executives that supported this obsurd request for compensation.
No increase of rates should be allowed. Westar needs to re-organize and trim the fat, especially targeting employees in the mold and character of Wittig.
pylon25 (anonymous) says…
Weststar is a monopoly because it would be prohibitively expensive for someone else to try to start a power company here. Is there any place you can move to in this country where you have a choice of electric companies? That argument makes no sense. Thats why there is government oversight. As i said, i'm not saying that they should be able to recouperate the expenses, just that the argument of overpaid CEO's.
pylon25 (anonymous) says…
It should have read "the argument of overpaid ceo's is overused, and for the most part, they earn their money. "