Archive for Friday, October 24, 2008

Westar announces agreement on 11 percent rate hike

October 24, 2008


— Electric rates would rise by an average of 11 percent for more than 675,000 Kansas homes and businesses under a proposed regulatory settlement announced Friday by Westar Energy Inc.

The changes would generate $130 million in additional revenue annually for Westar, the state's largest electric company. The company's shareholders would see a return on their equity of about 10.4 percent.

Westar had asked the Kansas Corporation Commission, which regulates utilities, for a 15 percent rate increase, generating $177 million in annual revenues and a return for shareholders of nearly 11 percent.

But in the resulting rate case before the commission, its staff and the Citizens' Utility Ratepayers Board had proposed significantly smaller increases and lower returns for shareholders. The citizens' board is a state agency representing residential and small-business customers.

The settlement by Westar with those adversaries and four other parties still must be approved by the three-member KCC, which has the power to alter its terms. However, by settling, Westar could expedite changes in its rates as the nation's financial markets remain in turmoil.

David Springe, CURB's chief attorney, said Friday that the turmoil "softened up Westar" on some issues and a settlement provides some certainty for the company.

"The financial markets, I think, provided some impetus to get the parties and keep them around the table," said Springe. "It certainly was one of the many factors that was in the back of our minds."

But Jim Ludwig, a Westar executive vice president, said the financial turmoil "cut both ways." He noted that while achieving stability in rates is helpful to Westar, having rates rise less than they could have is helpful to consumers who are feeling financial stress.

"I think the settlement is fair and reasonable, particularly in light of the economic crisis," Ludwig said. "It's favorable to consumers and to the company."

The KCC already has taken testimony from the public in Westar's rate case and planned to begin hearings Wednesday in which company executives, economists and consultants would be questioned by attorneys. The parties went ahead Friday with a pre-hearing conference, but the commission may delay its hearings.

Members of the KCC's staff declined to discuss the settlement.

Westar can't say yet how much residential customers' monthly bills will increase because the parties still are working out exactly how much revenue will come from each class of customer, Ludwig said.

Besides the KCC's staff and CURB, the other parties to the agreement include Wal-Mart Stores Inc. and The Kroger Co. grocery chain. Also involved are the Wichita school district, the state's largest, and Kansas Industrial Consumers, a coalition of representing some of Westar's highest-volume electric customers.

KCC spokeswoman Rosemary Foreman called it "an agreement in principle" and noted, "Nothing has been filed."

Westar had argued that higher rates will help it pay for new power plants and wind farms and repair damage to its system from winter storms. Also, it said, its shareholders should be allowed to earn a return on their equity typical for other utilities, so that it can continue to attract capital.

Both CURB and the KCC's staff had conceded the need for higher rates.

The utility opened a new, natural gas-fired power plant this year northeast of Emporia to handle periods of peak demand. It has a capacity of 300 megawatts, enough to meet the peak demands of 150,000 households, and will double in size next year.

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

In addition, Westar is a partner in planned wind farms in Barber, Cloud and Wichita counties to provide up to 296 megawatts of generating capacity.

Foreman noted that all of those projects were approved by the KCC before Westar filed its proposed rate increase in May.

"We knew from the outset that rates were going to go up," Springe said. "I've been telling everybody that Westar is going to get a good part of what they asked for."

And Ludwig said: "I think the settlement acknowledges all of those factors - new generation facilities, energy being brought onto our system, the cost of restoring our system after the December 2007 ice storm."

But Springe said the utility made a number of key concessions. He said it agreed to give up a proposal to give its shareholders an even higher rate of return on their investments in wind farms, and it accepted CURB proposals to redesign rates to encourage consumers to limit their electric use.

Also, Springe said, the utility agreed to give consumers more notice of increases in its fuel costs, which automatically are passed on.

"Those types of policy changes really sort of moved me over to believing this is, on balance, a pretty good settlement overall," Springe said.

As the Dow Jones industrial average dropped 3.6 percent during regular trading Friday, Westar's shares did slightly better. They dipped about 3.1 percent in value, down 56 cents to $17.41.


newsreader 9 years, 4 months ago

repair damange from winter storms? It's almost winter already, shouldn't that be done by now?

bluerose 9 years, 4 months ago

f-ing robbers.i am going to keep using LESS and LESS. i wish everyone would. new wind farms. yeah, i bet.higher executive salaries is more like it.

indythinker 9 years, 4 months ago

Agreement??? I didn't agree to this....

monkeyspunk 9 years, 4 months ago

indythinker (Anonymous) says"Agreement??? I didn't agree to this:."I had no idea who the KCC was myself. Learned something today.KCC is populated by Sebelius appointees. They answer only to the Governor.

willie_wildcat 9 years, 4 months ago

WTF!?!?!?!? As if everything else is going up except for all of our paychecks!

justthinking 9 years, 4 months ago

The KCC did not approve the last rate increase that Westar requested, so there is no guarantee that they will this time either. Unfortunately, the cost of everything is going up and companies have to pass the cost on to their customers.

Deja Coffin 9 years, 4 months ago

F'ing Westar! That's already my least favorite bill.

mtl 9 years, 4 months ago

Let the KCC know your thoughts about the proposed hike: or 1-800-662-0027.

quisp 9 years, 4 months ago

Someone needs to metaphorically walk into their coproprate headquarters with a symbolic bomb strpped to their chest and figuratively blow the place to smithereens. These people are f'n CROOKS.

bluerose 9 years, 4 months ago

tom shewmon,don't forget to thank the republican corporate pigs.imho, that is what it is all really about - not "kooky" environmentalism. that is just a politically correct coverup for executive greed.

cmheck 9 years, 4 months ago

I refuse to turn my heat on!! I'll use my fireplace and space heaters, screw giving them anymore money.....

fu7il3 9 years, 4 months ago

How do they expect people to pay bills with the cost of everything is going up at by far a higher percentage rate than the average wage increase?It is getting ridiculous. They all want newer and better equipment. That's all well and good, but sometimes you have to live with what you have.

napoleon969 9 years, 4 months ago

Nice to know we rate payers will be able to chip in to help pay Wettig and Lake's legal fees.

John Hamm 9 years, 4 months ago

Hey, don't gripe at Westar they're just playing the Greed game and they do play it well. Send your gripes to the KCC they're the ones that will approve the price increase - as you know they will.

Bill Griffith 9 years, 4 months ago

Jackbinkelman, the reason Westar doesn't invest in solar is in your wording-"free". They don't think they can make money on it and it could give autonomy (gasp) to customers. KCPL, on the other hand, is looking at leasing solar panels to its customers and making some nickels off the transaction. Of course, KCPL continues to kick Westar's rear in forward-thinking energy policy.

skinny 9 years, 4 months ago

I bet if Westar had competition they'd be lower their prices right now instead of raising them.This monopoly crap has got to stop.That goes for Sunflower Cablevision too!

FreshAirFanatic 9 years, 4 months ago

Anyone go to the energy conservation fair this past weekend? I walked around and picked up all the literature. Seemed to be plenty of ideas to combat the continuing increases...most weren't affordable yet though [wind and solar]. I did bring home a brochure about some kind of energy recycling system though, Not sure if it works, but the guy had a bunch of electric bills showing before and after results and was offering a 60-day money back guarantee. Anyone seen this before?

Bill Griffith 9 years, 4 months ago

The legal fees for Wittig and Lake cannot be put in the rate base that is determined by the commission. It must be taken from shareholder profits. I understand that profits are derived from subtracting gross costs from gross revenue and that is derived from rates, however the amount is not tax deductible so the commission did everything in its power to hit the shareholders and not Westar's customers on this issue.

Ann Hamil 9 years, 4 months ago

belexus73 (Anonymous) says:"Kmat is correct that Westar's legal fees for Wittig and Lake are not allowed to come from the customers of Westar but must be payed by the shareholders."You mean those same shareholders who according to this story MUST see a 10+% return on their equity?....Hmmmm, no we certainly aren't paying any legal fees with our electric bills.....oh brother.

Chris Ogle 9 years, 4 months ago

I am going to use less....much less... greed is getting out of hand. I am going to burn wood this year.

kmat 9 years, 4 months ago

Notnowdear - your arguement is irrational. Building a coal plant in western KS is only going to help bordering states. We get the polution, other states get the electricity. Our problem in eastern KS with the plants is that all the wonderful polution will come west with to us. I would like to not have more polutants, thank you very much.Napoleon - the legal fees for the Wittig case are not paid by our electric bills. I love it when people talk and have no clue of what they speak of.

ralphralph 9 years, 4 months ago

What makes something "affordable" is changing, in my mind. If a form of energy costs X% more, but the money is going to corn farmers or ranchers with windmills or solar panels, rather than to Venezuela or Iran, I think I can afford the difference. If something costs a little more but doesn't poison my kids, I might be able to afford that too. We have to look at costs over a longer time horizon. The fact that we are controlled by oil producers who hate us has a cost that is nearly immeasurable. If we had taken the 1970's oil crunch seriously, and done what really needed to be done, we would not be dragging that particular ball on the end of our chain.We need to get domestic and creative. We need to include nuclear generation as the steady, reliable source upon which we can build the more desirable but less reliable wind and solar sector. Start insisting that we do it now. Affordable?????

admireed 9 years, 4 months ago

Wish it was that hard for teachers to get an increase. 11% every umteen years would be great for my tax paying pocketbook

jhawks1234 9 years, 4 months ago

kmat, just where does the money for the Wittig fund come from, anyway? Is there a defense fund money tree somewhere that we haven't been told of? What kind of silliness makes you think that any money Westar gets doesn't come from utility bills we pay. Nice thinking.

John Hamm 9 years, 4 months ago

Sorry, notnowdear but the plants proposed for Western Kansas wouldn't have helped us one iota. Approximately 80% of that power was earmarked for Colorado and Texas.Now of course one has to ask, "What does an 11% increase here have to do with Western Kansas? Those plants weren't proposed by Westar but were Sunflower Electric plants.

compmd 9 years, 4 months ago

Westar is a company not a government entity. If they want to buy stuff and take risks, they are supposed to do it with their money, not ours. If they are justifying this by saying that its to build more and repair stuff, then that is something they should have considered and budgeted for. But they seem to be able to simply make us pay for it. I'd like to run a company like that, a company that never has any financial risk.

Bill Griffith 9 years, 4 months ago

Kmat is correct that Westar's legal fees for Wittig and Lake are not allowed to come from the customers of Westar but must be payed by the shareholders. CURB, headed by David Springe of Lawrence, is the people's representative on rate cases for those of you who did not think you were represented on utility rate cases. Also a reminder to folks that Westar is not a totally free market company nor a governmental entity-it is a hybrid-a government regulated monopoly that issues stock, has very little risk, dividends, but not a great deal of stock appreciation (in normal time of the stock market). If they were thrust into an unregulated world they would struggle mightily-but that is not going to occur.

Jaylee 9 years, 4 months ago

none of the three tax proposals have anything to do with westar. im not being condescending at all, hawk, but what are you talking about? im really confused.far as i knew:Q1: infrastructure, streets, repaving, etc. taxQ2: smaller T taxQ3: larger T tax

Jaylee 9 years, 4 months ago

notnowdear (Anonymous) says:"Kmat, let's talk about the pollution in our own backyard before we go spouting green ideologies affecting people living elsewhere."uhhh it affects us. here in lawrence. as a matter of fact, the proposed coal plant's smog would stretch all the way across the plains and settle in the appalacian mountains to the east. " It is my understanding that the North Lawrence plant is one of the most polluting plants in the state."yeah but the proposed coal plant would be THE biggest pollutant, so according your thinking putting in a plant that throws off ridiculous sums of smog is OK cause there is already some smog. ?correct?"If you are so up on pollutants, tell me how the Ogallala aquifer is doing. "near dry. this is not new information, but if you had other info, hook it up. im not quite sure how that helped your argument though? the proposed plant would only drain the aquifer faster than the farmers already have."I still parallel you blind greens with the same destructive ideology as the Religious Rite anti-abortionists. "im neither pro- or anti-abortion. i am pro-choice. but just like a lot of your remarks, i dont understand how this is relevant to your speech

Bill Griffith 9 years, 4 months ago

For referencing: KCPL is asking for and will probably receive a higher rate increase (over ta total of three rate requests for the building of Iatam II, some wind and energy efficiency projects) than Westar is obtaining. TVA is getting a 17%-ish rate increase for it customers. Weather related disasters are often put into rate cases and last years ice storm would qualify and this was done in a timely manner. As far as the best way to "pay the bills" with rate increases is by making your home as energy efficient as possible. My Westar bill last month was thirty dollars for a 1800 sq. ft. home due to ee improvements made on it. One other point while so many people are checking this blog out-LEC and JEC will have their pollution upgrades finished by next year.

ChicagoAlum 9 years, 4 months ago

Screw Westar and Sunflower Broadband.. Glad I no longer have to put up with them.. I know the energy rates are going up, but don't look twice, but Sunflower is the most outrageous service by far.. I pay $100 less a month in Chicago, nonetheless...

Commenting has been disabled for this item.