Public hearings set on proposed Westar rate hike
Public hearings on Westar Energy’s $91 million rate increase request will be at 6 p.m. Tuesday in Topeka and Wednesday in Wichita.
The Tuesday hearing will occur at the Kansas Corporation Commission office at 1500 SW Arrowhead Road. It will also be broadcast by video conference in the College Center Conference Room at Kansas State University-Salina and Room 315 in Hughes Hall at Pittsburg State University.
The Wednesday hearing will be at Wichita State University in Room 180 (Entrance N) of the Eugene M. Hughes Metro Complex.
Recent rate increases
Since 2009, Westar customers have seen a $265 million increase in rates. The company is now seeking another $91 million increase. Here is a breakdown of rate increases. Note: The 2008 rate increase took effect in 2009.
2008: general rate increase, $130 million or 11 percent.
2009: transmission delivery rate increase, $31.8 million or 2.4 percent.
2009: environmental cost recovery rate increase, $32.4 million or 2.5 percent.
2010: abbreviated rate increase, $17.1 million or 1.2 percent.
2010: transmission delivery rate increase, $6 million or .4 percent.
2010: environmental cost recovery rate increase, $13.5 million or .9 percent.
2010: energy efficiency rate increase, $5.8 million or .4 percent.
2011: transmission delivery rate increase, $17.4 million or 1.1 percent.
2011: environmental cost recovery rate increase, $11.2 million or .7 percent.
2012: rate increase request of $91 million or 5.85 percent.
— Source: Westar Energy
Topeka ? State regulators on Tuesday will hold the first of two public hearings on Westar Energy’s $91 million rate hike request.
If approved by the Kansas Corporation Commission, the proposal would increase residential customers’ bills by approximately $6.50, or 5.85 percent, per month, and give Westar shareholders a 10.6 percent return on equity.
Officials with Westar, the state’s largest electric company in Kansas, say the increase is needed to maintain a reliable system, comply with environmental regulations and keep its commitments to the employee pension system, which was hurt by stock market losses.
“Our costs to provide reliable service and comply with new regulations has increased since our last rate request, which has led us to ask for a modest increase in price,” Westar spokesman Leonard Allen said.
The Citizens’ Utility Ratepayer Board, or CURB, is opposed to the proposed increase.
“Westar is asking for 10.6 percent shareholder profit, which we believe is clearly excessive in a market where 30-year bonds are selling below 3 percent,
unemployment is high and risk has been moved to ratepayers through all of the line item riders,” said David Springe, consumer counsel for CURB.
But Westar’s Allen said the 10.6 percent return on equity is in line with Westar’s peers in the electric industry.
The “line item riders” Springe referred to are increases that Westar receives by passing through costs to ratepayers.
In 2008, Westar requested a $177 million rate increase and was granted a $130 million increase that took effect in 2009. Since then, the utility has also received several increases from the KCC through pass-throughs of costs related to transmission investments and environmental improvements at its plants.
“We need to rethink this policy of allowing annual increases with little oversight,” Springe said.
About $20 million of the proposed increase now before the KCC is to expand a tree-trimming program. Westar says this will reduce outages from tree branches falling on power lines, but Springe said $20 million extra for this job seemed high when Westar is already spending $25 million per year on tree trimming. Allen says that the preventive trimming program will save money in the long run and increase reliability.
Another $37 million is needed to help Westar’s employee pension fund, which was hurt by stock market losses.