Topeka Westar Energy Inc. customers are likely to see their rates rise $80 million or more over the next year, on top of a significant increase Kansas regulators approved about two months ago.
The higher rates would cover costs associated with upgrading Westar’s transmission system, improving pollution controls at its power plants and investing in wind farms.
The Kansas Corporation Commission, which regulates utilities, approved part of the latest proposed increases last month. It plans to consider the other parts this spring and summer, and Westar has told institutional investors such as pension and mutual funds that it expects all the increases to be in place by early 2010.
The increases would deal with costs that weren’t addressed when the commission approved a $130 million increase in rates in late January. Westar has about 680,000 customers in Kansas and is the state’s largest electric utility.
Westar is certain to get the increases, said David Springe, chief attorney for the Citizens’ Utility Ratepayers Board, a state agency representing residential customers and small businesses.
Springe said Wednesday that in recent years, the commission and Kansas Legislature have changed how utility rates are set, to encourage utilities to build new plants, invest in wind farms and upgrade existing plants and transmission systems. State policies make it easier for utilities to recover the costs, he said.
“It’s pretty much a done deal. Your rates are just going to keep going up and up and up,” Springe said. “The system right now is set up to carry out any number of policy objectives, and the consumers’ wallet is there for the picking.”
Neither Westar nor the commission have calculated how much the latest round of increases would cost residential customers on their monthly bills. The increase approved in late January was about 11 percent on average, adding between $6 and $9 to residential customers’ monthly charges.
Westar noted that the additional rate increases will cover the cost of replacing transmission lines and poles, as well as stringing a new high-voltage line between Wichita and Hutchinson. Westar also has built a new natural gas-fired power plant outside Emporia to handle peak demand and invested in wind farms in western Kansas.
Also, the company estimated that it made $243 million in investments in pollution control upgrades in 2008.
“A lot of these are based on the continued investment in equipment for serving our customers,” Bruce Burns, Westar’s director of investor relations, said Wednesday, about the new increases. “The investments are necessary so that we can provide that safe, reliable energy our customers have come to expect.”
In early March, the commission approved an increase in Westar’s rates of nearly $32 million to cover costs associated with upgrading its transmission system. Those charges are now showing up on customers’ bills.
Less than two weeks after the commission’s order, Westar filed another request for a rate increase of nearly $34 million to cover the costs associated with upgrading the pollution controls on its plants. The commission plans to have hearings on the request in May, and Westar hopes the charges will be in place in June.
Commission spokeswoman Abbie Hodgson said the agency plans to have hearings this summer on raising rates to cover Westar’s investments in the Emporia plant and wind farms. The company has told investors rates would rise again from $15 million to $20 million.
At the close of regular trading Wednesday, shares of Westar were unchanged at $17.53.