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Archive for Thursday, May 29, 2008

Westar seeks 15 percent rate increase

Customers could be paying an average of $9.62 more a month

May 29, 2008

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— The state's largest electric company wants to charge homeowners and apartment dwellers $10 more a month to cover the costs of new power plants and wind farms and to help it recover from winter storms.

Westar Energy Inc. is proposing a 15 percent rate increase, which would increase its annual revenue by $178 million. The Topeka-based company filed its request Wednesday with the Kansas Corporation Commission, the state agency regulating utilities.

But a state official said the rate increase wouldn't include all the costs that are likely to be passed along to consumers by Westar. Besides what Westar has proposed, its customers will be paying for environmental improvements to its power plants and rising fuel costs, he said.

Company officials said Westar needs additional revenue to pay for a new power plant outside Emporia, a power plant in central Oklahoma and investments in three wind farms. Also, it said, ice storms in December required $69 million worth of repairs.

"Energy consumption continues to grow among all segments of our customer base," Bill Moore, the utility's president and chief executive officer said in a statement. "Our primary goal remains providing safe, reliable, high-quality energy service at a reasonable cost to all customers."

Under Kansas law, the commission has until Jan. 23, 2009, to decide whether to grant all, part or none of Westar's proposed rate increase. Westar has about 673,000 customers.

David Springe, chief counsel for the Citizens' Utility Ratepayers Board, said Westar has said it has been - and will continue to be - forced to upgrade and expand its generating plants and transmission system. His board, a state agency, represents residential customers and small businesses in cases before the KCC.

Westar estimates it has spent $1.2 billion since 2004 on improving and expanding its generating and transmission systems.

"Consumer rates are going to go up substantially, even if I'm brilliant at my job," Springe said. "We've sort of taken the system as far as we can take it, and now you've got to spend some money on upgrades. Every utility is really in this position."

However, Springe noted that because of KCC orders in recent years and policies set by the Legislature, rising fuel and transmission costs are automatically passed on to consumers.

Also, each year the KCC sets charges to help utilities cover the costs of their environmental improvements, separately from general rates. In March, Westar asked to set that charge at $27 million.

Springe said of the rate increase Westar proposed Wednesday, "This is half the story."

But Westar officials noted that they are proposing to spread their additional costs over several years to lessen the effects of the rate increase. For example, it would recover its storm-related losses over four years.

And, the company noted, it has postponed plans to build a new coal-fired power plant because of construction costs.

"This requested increase is far lower than it would have been had we embarked on building a new coal plant," Moore said.

Westar has about 362,000 customers in its northern region, which includes Emporia, Hutchinson, Lawrence, Manhattan, Olathe, Parsons, Salina and Topeka. Its residential customers would see their monthly bills increase an average of $9.62, the utility estimated.

Residential customers in Westar's southern region, centered on Wichita, would see their monthly bills increase $10.34. The region includes not only Wichita but Arkansas City, El Dorado, Fort Scott, Independence, Newton and Pittsburg.

Westar is building a new natural gas-fired power plant northeast of Emporia to help it handle periods of peak demand. It initially will have a capacity of 300 megawatts - enough to meet the peak demands of 150,000 households - and will double in size next year.

Westar also purchased a 300-megawatt natural gas-fired plant in 2005 in Logan County, Oklahoma, north of Oklahoma City, to help it handle peak loads.

In addition, by the end of June, Westar and developer partners will have broken ground on wind farms in Barber, Cloud and Wichita counties that will provide up to 296 megawatts of generating capacity for Westar.

"We've made this new foray into wind power," said company spokeswoman Karla Olsen. "It's a sizable project."

In regular trading Wednesday on the New York Stock Exchange, Westar's shares closed up 14 cents, or six-tenths of 1 percent, at $23.50. Over the past year, its shares have been as low as $21.75, but also have approached $27.

Comments

whatatown 6 years, 8 months ago

Hmmmmm- still wondering how people were figuring that Western Kansas rates were going to go down due to the coal power plant since that power was going to be SHIPPED AWAY leaving us with the amazing pollution but none of the benefits.

salad 6 years, 8 months ago

" why are the lines buried in all the new neighborhoods?"Because they're low voltage lines: 220 v versus 240,000 vAlso, overhead lines in neighborhoods have to be low enough to the ground to reach the house, that's they're in range of Aluminum ladders, tree pruners, and tree limbs. It makes more sense economically and safety-wise to bury local lines, and elevate transmission lines.

gccs14r 6 years, 8 months ago

"Because they're low voltage lines: 220 v versus 240,000 vAlso, overhead lines in neighborhoods have to be low enough to the ground to reach the house, that's they're in range of Aluminum ladders, tree pruners, and tree limbs. It makes more sense economically and safety-wise to bury local lines, and elevate transmission lines."So again, why don't they bury their existing (neighborhood, the ones I meant) lines to reduce the maintenance cost? It's not the high-tension lines that get pulled down by tree limbs every time there's an ice storm.

Boston_Corbett 6 years, 8 months ago

It is beyond hilarious seeing Cool complain one iota about his energy bill.

gccs14r 6 years, 8 months ago

When is Westar going to bury its lines so they don't have to be repaired every time the wind blows?

Charles L Bloss Jr 6 years, 8 months ago

Plus all of Wittig's millions in legal fees, we get to pay those too. Thank you, Lynn

Boston_Corbett 6 years, 8 months ago

Cool, that wasn't a complaint? Hilarious, you are.

salad 6 years, 8 months ago

"When is Westar going to bury its lines so they don't have to be repaired every time the wind blows?"Because burying lines creates more problems than it solves. You'd have to spend enormous amounts of money on insulation so the lines won't arc through the ground. Then you'd have to bury the line huge distances apart, because even with insulation plus the earth, it's still not as good an electrical insulator as air. You'd have to buy huge amounts of property on which to bury these lines. Lastly, even if you could bury the lines bundled together without arcing (not possible), you'd end up with insurmountable capacitance problems after a certain distance due to having the lines so close together. I know it seems like a good idea to bury the lines, but believe me, there are really smart engineers who've already thought these problems out and arrived at the best solution.

georgeofwesternkansas 6 years, 8 months ago

"newsreader (Anonymous) says: Don't they have insurance their property?Is there any way the Lawrence residents can vote to stop using Westar and use whatever company Kansas City uses??????"No, the poles, wire, meters, everything belong to Westar. They are a regulated monopoly and no one else can enter their service area. The city of Lawrence would have to purchase the assets and set up their own utility, if Westar would sell.

Boston_Corbett 6 years, 8 months ago

I agree with George. Stick your head out the window and see if you can hear the rest of the state crying for Lawrence.So sad, so sad.

georgeofwesternkansas 6 years, 8 months ago

Only 15%?? I would take it retroactive to January if I could have your rates. Hey whinebags, try 9 cents/kw.

newsreader 6 years, 8 months ago

Don't they have insurance their property?Is there any way the Lawrence residents can vote to stop using Westar and use whatever company Kansas City uses??????

Paul Geisler 6 years, 8 months ago

Hey Logrithmic,It's been 6 years since Westar forced Wittig & Lake out so it's about time you stop blaming Westar's current woes on their past actions. Westar has been making money since their departure in 2002, but those profits have been split between the shareholders and the company (executives, internal shareholders, etc.), with very little going back to the rate payers.Unfortunately the days of cheap electricity, natural gas, water, etc. are a thing of the past. And the de-regulation of U.S. utilities hasn't been much of a success.BTW, if you want the government to save some of your taxpayer money then tell the Feds (i.e., Eric Melgren & Dick Hathaway) to drop the remaining charges against Wittig & Lake and call off the third trial!!!

bearded_gnome 6 years, 8 months ago

you nailed it Sigmund, 10;39p.m. right on. the greenie-wheenies have narrowed the sources, increased the environmental costs, then complain that electricity gets more expensive! its like a doctor who aims to hit you with his car, so he can charge you for treating you after the accident! on some blogs some of these creeps actually salivate over $10 per gallon gas. and because they hate free enterprise, and any CEO, no matter what, they point their green fingers at them. if the coal burning plants get built, then there's more electricity for everybody! even though much gets shipped out of state, everybody's rates go down because it is more abundant and produced cheaper overll. besides, the KDHE secretary's ruling will be overturned on the western ks coal power plants, because he didn't have the authority to regulate CO2 emissions under state law! ***when CO2 is outlawed, then only outlaws will breathe.when methane is outlawed, then only outlaws will fart.

OnlyTheOne 6 years, 8 months ago

gccs14rBecause those lines carry about one-tenth the voltage of the major lines. And have you ever priced what it costs to install those lines? It ain't cheap! Westar wouldn't even work with me on sharing or spreading the cost out over time. You'd think they would want all homeowners to bury lines because they don't have to work on them! If something goes wrong - like a leak in a conduit - the homeowner is responsible for repair.

terrapin2 6 years, 8 months ago

None of the costs of Wittig's legal fees have been passed on to the rate payers. Westar has said this many times. And if you all are so sure he is guilty, then he will end up paying his own legal fees after the third trial anyway. This rate increase has nothing to do with Wittig/Lake.

georgeofwesternkansas 6 years, 8 months ago

"cool (Anonymous) says: what's with Westar.my current bill was $30.08 for energy chargeand $17.56 for fuel charge."The $30.08 is for coal generated power about 80% of your usage. The $17.56 is gfor gas generated power, about 15% of your power.Arn't you excited soon it will be the other way around $83 for gas and $3 for coal. Won't it be great to get rid of that nasty coal??

CatFan 6 years, 8 months ago

Maybe now you'll begin to understand why Western Kansas is so upset with the Sebelius/Bremby opposition to more coal. If Westar gets the full increase, you will still pay lower rates compared to what we face with all wind and gas. Frankly, you'll find no sympathy out west for your complaints. At least you have economical source of baseload coal. Be thankful, quit whining and ask your legislators what it feels like when the shoe is on the other foot.

Sigmund 6 years, 8 months ago

bearded_gnome, the KCC does not care where the profits come from when setting the rates for in state consumers. Each dollar of profits earned from selling to out of state customers is one less dollar in profit that the KCC needs to allow to come from in state customers. If a utility could get all of its profit from out of state then they could sell to their in customers at costs.Obviously that would upset the Ecomentalist in Kansas as cheaper electricity encourages waste and there would be less incentive to conservation.

gccs14r 6 years, 8 months ago

"Because burying lines creates more problems than it solves."If that's true, then why are the lines buried in all the new neighborhoods?

hornhunter 6 years, 8 months ago

dirkleisure, cool, Where are you now? And your increase has just begun!Did they kiss you first?

jafs 6 years, 8 months ago

Perhaps we should start being mindful of our use of energy and conserving it whenever possible.

KsTwister 6 years, 8 months ago

Funny how over the years things have changed to protect us.Can't say that when ma bell was a monopoly that anyone complained of rates though.

Boston_Corbett 6 years, 8 months ago

Cool: Perhaps you should use some clean energy from Western Kansas instead of that Westar stinkem. Of course, it will cost you a lot more!

georgeofwesternkansas 6 years, 8 months ago

In response to our fellow kansans woes of such increadable non-humain rate increase proposals we have dispatched the Whambulance to help rescue you from this horid financial burden.We are doing this because we care.

KsTwister 6 years, 8 months ago

Not sad. Kansas is just a stupid to let energy companies railroad them, I think it is hilarious.

georgeofwesternkansas 6 years, 8 months ago

"logrithmic (Anonymous) says: Hell no. I want a third trial. I think these louts deserve the very best when it comes to our legal system."For what?? One small fact that seems to have escaped all of you is the fact that allmost everythig that KU boy did was with the blessing of the Board of Directors. This whole time they are the ones responsable for everything, but it seems that you missed that little tidbit of information in your lust to jail someone. I cannot believe you did not sue the bastards. The feds went after the money not the root of the problem.

craigers 6 years, 8 months ago

I like how Westar thinks they are entitled to a set profit margin. They expect to recoup all the expenses they incur and if the expenses go up, they just pass all of it along to the customer. This is crazy. Will it do good to contact the KCC? I didn't know if public comments actually swayed them or is it just a Westar asks, and we approve type of situation.

Sigmund 6 years, 8 months ago

Monopolies, like Westar, are regulated because they are insulated from competition. Competing utility companies within a single market, complete with multiple power lines from multiple providers and multiple generating plants, is too costly. Without the corresponding economies of scale of a single provider neither company would be able to recover their fixed costs without consumers paying substantially higher rates.Without private capital (stockholders and bondholders) the taxpayers would have to pay for all infrastructure. The solution? Allow private investors to fund the infrastructure of the single provider, who benefits from the economy of scale, but allows the State of Kansas set the rates. But if the State is allowed sets the price then some guaranteed profit must be promised to investors or else no one would invest, afraid that the State would set too low and they would not get a fair return or worse.Springe and CURB don't set rates, the KCC does. It was Springe and CURB who were most responsible for bringing to light the abuses of Wittig and Lake. The fact that their convictions were overturned has nothing to do with CURB or the KCC. But even if every penny of Lake's and Wittig's were returned to Westar, it wouldn't make that much difference in your utility bill considering the cost of generation and maintaining the infrastructure.The KCC sets the rates after listening to Westar's request and CURB is there every step of the way to represent consumers. BUT if the State will not let Westar build cheap generation plants and instead insists on expensive alternative energy sources (wind, solar, etc) then the inevitable result will be higher rates.I find it amusing that the ones complaining the most about higher rates are the very ones insisting on expensive generation. After all higher costs means higher rates to consumers, including themselves, who will be economically motivated to conserve, the very thing they desire. No one conserves cheap resources, they waste them. You want real conservation? Double the price, then triple it. The only carbon emissions then will be from the screaming.If it were solely up to Westar they would have chosen the least costly fuel to generate your electricity, but it wasn't. While some imagine some magical world where expensive alternative energy sources leads to lower prices, it isn't reality. Cost plus pricing quickly places the costs of Gov. Kathy's alternative energy policies where it belongs, on the consumers who demanded it.Ecomentalists made your bed, now you get to sleep in it.

Bill Chapman 6 years, 8 months ago

I just wonder what the percentage of investor earnings to profit re-investment (back into Westar) is?

Centerville 6 years, 8 months ago

You can carp at the KCC and CURB all you want, but you seem to be determined to forget that Sibileus has already promised Westar anything they want if they'll throw up some wind turbines. And this is just the first installment. The KCC will round up some dogs and ponies and the sad political hack at CURB will send out a couple whiney press releases and they'll make a big deal out of shaving 1% off this request. Westar was given carte blanche by our governor, who appoints CURB and KCC. So go figure out how this will end.There are actually people in Lawrence, state employees, who have monthly deductions from their bank accounts to give to Sibileus' campaign. Maybe they can grow some and reduce that amount by the increase in their electric bills.

georgeofwesternkansas 6 years, 8 months ago

Wow, I need to stay up later, Sigmund where have you been??

salad 6 years, 8 months ago

"So again, why don't they bury their existing (neighborhood, the ones I meant) lines to reduce the maintenance cost? It's not the high-tension lines that get pulled down by tree limbs every time there's an ice storm."OK, I see what you're getting at: you have to realize that there are a series of stepped-down voltages from the 240kv transmission line. The main line line in you city is probably 13.5kv three phase, which goes to the substation and steps down to a couple thousand volts three phase, which goes to another transformer in your neighborhood which steps it down further to 600v three phase which then goes to the transformer on the pole , which steps it down again to the 220 single phase and goes to your house. It's much much easier to maintain the lines and find problems where you can see them. It's also cheaper to let air be the insulator rather than coat the lines with insulation and bury them.

KsTwister 6 years, 8 months ago

Pretty comparatively like blackmail to have to increase rates to get such a "windfall profit" by Westar. Trying to become like the oil companies who are doing likewise, no doubt. Makes one wonder who is actually in control of regulating these corporations doesn't it? If wind energy wasn't such a good idea then why does Westar want every homeowner to pay for their involvement----so much for the coal argument in Kansas.

georgeofwesternkansas 6 years, 8 months ago

Log, I called the Whambulance for you, look outside is it there yet??

heycobo 6 years, 8 months ago

interesting how people want coal plants to be more "environmentally friendly" but complain about having to pay for it. you can't have your cake and eat it too.

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