Topeka 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.