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Archive for Friday, October 24, 2008

Westar announces agreement on 11 percent rate hike

October 24, 2008

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— 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.

Comments

Bill Griffith 5 years, 5 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.

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ChicagoAlum 5 years, 5 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...

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jackbinkelman 5 years, 5 months ago

Why wouldn't electric companies invest in some solar to add energy to it's own grid? After one buys the panels it's Free and Clean isn't it?

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Bill Griffith 5 years, 5 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.

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hawkperchedatriverfront 5 years, 5 months ago

Jaylee, they do to have to deal with the 11% increase, You pay city and county sales tax on your Westar bill if you live in Lawrence KS. If your bill / rates go up 11%your bill goes up. If you vote to pass the sales tax increase , all three issues, then you will pay more sales tax on the Westar bill.I cannot believe how dumb the people are in this so called intellectual commuiinty..Yes, Jaylee, you are confused. So!

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goodcitizen 5 years, 5 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.

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DouglasCountySucks 5 years, 5 months ago

I hope all the shareholders get cancer. What a bunch of rotton Ahol-s 11% in this time and economic downturn.We can thank the KCC for letting them do it as well. What a bunch of great people to give us this gift just before Xmas and with jobs going away and people being straped so hard they are loosing the home in which they live. . . .THANK YOU WESTAR Get CANCER SOON !!!!!!!!!!

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Bill Griffith 5 years, 5 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.

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Bill Griffith 5 years, 5 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.

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notnowdear 5 years, 5 months ago

Relevance! You have to think about it. Are you up for it?I encourage you to think about it. Take more time with it. There is no hurry. Reread what I have said. See it past your blinders. Ask yourself how they are similar.

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notnowdear 5 years, 5 months ago

Jaylee, deal with the smog created in your own town first. You must have missed that point.

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compmd 5 years, 5 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.

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Jaylee 5 years, 5 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

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hawkperchedatriverfront 5 years, 5 months ago

I'm going to turn off the electricity and the gas and use the fireplace to read and cook on. I will start with the attic first and cut up the flooring and burn it. Then the roof rafters, then move to the second floor and burn the flooring and wood work. knock the plaster down and burn the lath and move to the first floor and do the same. Then when it is time to bulldoze the house and the neighborhood group wants to save it,, they can rebuild it from the ashes. I will throw them in the street when the snow comes.So with an increase, you still want to VOTE for a sales tax? Vote NO for sales tax. Westar will vote for you.

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OonlyBonly 5 years, 5 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.

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Jaylee 5 years, 5 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

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hawkperchedatriverfront 5 years, 5 months ago

for the person who is going to use space heaters, if yours run on electricity, then you aren't saving anything if Westar provides your electricty.We are screwed with electricity for refrigerator and lights.

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notnowdear 5 years, 5 months ago

I am hardly irrational. I just know more than you.

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notnowdear 5 years, 5 months ago

While I did take macro at KU, all I learned from it and the other classes is that economics is a hind-sight science. Like today, Greenspan say "Opps, there was a flaw". No kidding!! There are a whole out-house load of flaws in economic theory.On immigration: Who do you suppose was here before the Pinta, Nina, and Santa Maria touched the new world? Doh! And didn't the all-hallowed Columbus say that the natives would make great slaves? Yes, he did. Those illegals deserve to be here as much as Columbus did. Now how much that is is up to you. But you have to remember history. Caucasians invaded this country and totally obliterated the native's highly organized social system. What comes around goes around.Kmat, let's talk about the pollution in our own backyard before we go spouting green ideologies affecting people living elsewhere. It is my understanding that the North Lawrence plant is one of the most polluting plants in the state. Let's get it cleaned up first. Let's not be hypocrites here.If you are so up on pollutants, tell me how the Ogallala aquifer is doing. I saw some really! recent research the other day. Let's see if you did.I still parallel you blind greens with the same destructive ideology as the Religious Rite anti-abortionists. If I had to side with one, it would be the greens but I would still get them to see more reason to their ideologies. I live in a house with two (2!) alternative sources of energy, have worked this year to maximize their effects, and have made sure my appliances are employing at least 80% efficiency. My household uses half the natural gas as the houses around me, according to the two (!) meter-readers I have come in contact with.Sorry, I am not buying the arguments you folks made. I see so much hypocrisy on these issues.

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admireed 5 years, 5 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

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jhawks1234 5 years, 5 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.

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hawkperchedatriverfront 5 years, 5 months ago

And you still want to vote a sales tax increase? $50 light bill gives the city automatically 1% which is 50cents times 12 months equals $6.00. and that is if the light bill averages $50 a month. Plus the county sales tax is added also.Vote NO. Show intelligence in this community. Vote NO on November 4th on all 3 sales tax issues. The light company will raise your tax for you, duh?

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ralphralph 5 years, 5 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?????

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kmat 5 years, 5 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.

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invictus 5 years, 5 months ago

xbusguy Just wait untill you have to pay a carbon tax on that. Comming soon.

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Chris Ogle 5 years, 5 months ago

My 11% raise must be in the mail.

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Chris Ogle 5 years, 5 months ago

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

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Nick Vaughan 5 years, 5 months ago

See, this is what Democratic policies lead too. Just wait, if Obama wins, you all will turn sinical, and ask " why is this happening ".You want green energy, now you'll start, yes, start to pay for it. It will only get worse from here on out. Take it from someone who worked on these Westar Plants, you shoulda let those coal plants go in.Dumb democrats, they just dont think things through. May God have mercy on us, and all the unborn, if Obama and his socialist ideologys come to practice.

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FreshAirFanatic 5 years, 5 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, www.ecotrustenergy.com/ghake. 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?

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invictus 5 years, 5 months ago

My earlier post was referring to you incoherent rant involving bubbles and Enron which have nothing to do with a standard periodic rate increase. I doubt you know anything about Enron or Macro-Economics.

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invictus 5 years, 5 months ago

My father is from western Kansas I visited my grandma out there when I was younger, but she had enough since to move to Wamego. Now my only experience with Western Kansas is avoiding Mexican nationals when I drive to Colorado to ski.

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notnowdear 5 years, 5 months ago

Get a hot-water heater on demand. Be a bit of advice: make sure the unit is here in town before any plumbing at all is done.

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Deja Coffin 5 years, 5 months ago

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

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notnowdear 5 years, 5 months ago

Oh, invictis, you must be one of those green people that stand on principle but know you won't really live any of the results of that decision.Perhaps the response was above your head, or that there is a part of the issue that you don't understand.When was the last time you lived in W. Kansas?

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notnowdear 5 years, 5 months ago

I suggest you mention the parallel between you anti-coal plant people and the Religious Rite anti-abortionists at your Sunday meeting. The comparison is just so accurate and apropos.

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mtl 5 years, 5 months ago

Let the KCC know your thoughts about the proposed hike: public.affairs@kcc.ks.gov or 1-800-662-0027.

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invictus 5 years, 5 months ago

notnowdearI think you win the prize for the most irrational argument of the day.

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skinny 5 years, 5 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!

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notnowdear 5 years, 5 months ago

And yet people in Lawrence cry boohoo because somewhere in Western Kansas, they want to reduce their utility costs by having a new electricity plant. I mean, really!!!It is as if everyone in Lawrence goes to Western Kansas for all their shopping needs, all their recreation and leisure needs? As if they knew the plight of the people who live in W. Kansas. Funny, that just doesn't happen. The fruity people here stand on principle but have no concept whatsoever about the needs of the people in W. Kansas regarding utilities. The people here just boohoo their ideals, kind of like GOP Religious Rite anti-abortionist.I say, mind your own business and let W. Kansas do what it must to survive.

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justthinking 5 years, 5 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.

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notnowdear 5 years, 5 months ago

OK, so we have a tech bubble, a housing bubble, a bank credit bubble, and an oil bubble (look at today's events). Who is to say that the utilities are not in a bubble category as well? Look at what enron did to California, if you think it cannot be done.Westar, at this point in time, you would be wise to reverse this position or you will fall too.

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OonlyBonly 5 years, 5 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.

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cmheck 5 years, 5 months ago

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

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invictus 5 years, 5 months ago

Electric energy in Kansas is still extremely cheap when compared to anywhere else in the world. If you don't like paying for electricity then don't use it. The recent increase in electric bills has been mostly due to higher commodity prices that have rippled through electric utilities. The cost of coal, oil and natural gas play a huge role in the end cost to consumers. Environmentalist and speculation have driven the price of energy up over the past year. Legal bills are a drop in the bucket compared to these non-market driven forces.

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bluerose 5 years, 5 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.

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willie_wildcat 5 years, 5 months ago

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

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Tom Shewmon 5 years, 5 months ago

Thanks Westar, my bill are already near double from last year. Thanks alot. Thank you too Sebelius, and thank you Al Gore and thank you everyone who is a kooky environmentalist. Thank you, thank you, thank you!

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monkeyspunk 5 years, 5 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. http://www.kcc.state.ks.us/about/index.htm

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jerk_patrol 5 years, 5 months ago

I can't wait for Lawrence to subject to the same no-coal plants rule that they want to impose on all others. 11% is peanuts.

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autie 5 years, 5 months ago

Obamination usurp the Oval Office = something to do with Westar's rate increase. Donald Duck could be elected and the rates would go up. Marion, you are an idiot. I'm waiting for the day that the technology improves enough that it can be much more affordable to have a mini turbine on my roof that will feed back into the grid...That'll make em happy..oops, I have gobs of Westar stock, what am I saying?

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Marion Lynn 5 years, 5 months ago

Ah, yes and should the Obamination usurp the Oval Office, your situation will become even more dire!What about those coal plants now?

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logicsound04 5 years, 5 months ago

I can understand a rate increase for green energy...in fact I would happily pay a bit more for that feature.HOWEVER, I don't understand the idea of them raising rates to pay for something that should be a standard operating cost--winter storm damage. What in the f***ing hell?

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napoleon969 5 years, 5 months ago

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

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fu7il3 5 years, 5 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.

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indythinker 5 years, 5 months ago

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

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bluerose 5 years, 5 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.

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blue73harley 5 years, 5 months ago

Anyone out there get an 11% raise? Anyone?

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quisp 5 years, 5 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.

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newsreader 5 years, 5 months ago

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

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