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Archive for Friday, June 18, 2010

KCC counters KCP&L rate request

June 18, 2010

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— A Kansas Corporation Commission staff report has recommended that Kansas City Power & Light reduce its revenues by $9.1 million, rather than increase them by $55.2 million, as the utility has requested.

In a report issued late Tuesday, KCC staff rejected arguments in KCP&L’s proposal that customers should pay for the cost of overruns at its Iatan 2 coal-fired power plant, which is under construction and expected to be in operation late this year.

That project is expected to cost $1.2 billion by the time it is finished, The Kansas City Star reported.

KCP&L spokesman Chuck Caisley said the plant will be the most efficient and technologically advanced plant of its kind in the country.

It’s also the cornerstone of the utility’s five-year comprehensive energy plan, which has resulted in a series of rate increases in Kansas and Missouri. The plan also includes environmental upgrades, energy conservation programs and construction of a wind farm.

If the commission approves KCP&L’s request for an 11.5 percent increase, and Missouri regulators approve a 14 percent increase requested in that state, electric rates will have risen about 40 percent in Kansas and 50 percent in Missouri over the past five years.

Before those rate increases, the utility had not raised electric rates for 20 years and had lowered them several times, so customers were paying less in 2006 than in 1988.

“Over a long-term perspective, yes, there is a price escalation that occurs around the development of an actual plant,” Caisley said. “But then you take that plant and use it for the next 50 years, it’s the most cost-effective way to provide electricity for a growing demand.”

But the KCC staff report — which is nonbinding to the regulatory commission — doesn’t think ratepayers should pick up the tab for cost overruns.

The report also calls out the utility for including $3.8 million for improvements at its new headquarters in Kansas City; says the amount the utility wants to collect for depreciation should be reduced; and recommends lowering the rate of return KCP&L could collect on its investments.

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