Archive for Tuesday, November 29, 2011

Westar ratepayers oppose proposed $91 million increase

November 29, 2011


— Westar Energy on Tuesday said it needed a $91 million rate increase to provide reliable service, but several customers said the state's largest electric utility needed to economize.

James Peek of Topeka complained of executive salaries at Westar, saying, "I see only loosening of the belt."

He noted that former Westar president and chief executive officer William Moore's compensation package was approximately $1 million in 2008 and increased to nearly $6 million in 2010. Later, Westar officials said much of that was due to Moore receiving a stock award over a three-year period that was reported in 2010.

Even so, David Springe, consumer counsel for the Citizens' Utility Ratepayer Board, said, "It's good to be a Westar executive."

Their comments came during a public hearing before the Kansas Corporation Commission, which will decide how much Westar should get. The three-member commission is holding a second hearing Wednesday in Wichita.

An evidentiary hearing will be held in February. The commission must rule in the case by late April.

If approved by the KCC, 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.

Freda Dobbins of the small town of Goff in Nemaha County said her church struggled last summer to pay its utility bill.

She opposed the part of Westar's proposal that would provide a 10.6 percent return on equity.

Dobbins said people who are able to save money are lucky to get a one percent or two percent return. "Why are people being asked to use that little bit of income to help pay 10.6 percent?" she asked.

Greg Greenwood, a senior vice president at Westar, said, "This case is really about providing reliable service to our customers."

Greenwood argued that some of the increase was needed to provide fair wages to Westar employees.

But Peek said in the current economy, there were many people who were not getting pay raises.

Springe noted that even though Westar had not received a general rate increase since 2008, it had received several pass-through increases totaling approximately $120 million.

He urged ratepayers in the audience to contact their friends to try to get more people to comment on the proposed rate increase to the KCC. Only about a dozen members of the general public were at the Topeka meeting, and a handful could be seen at remote sites in Salina and Pittsburg that were connected by video-conference.

Public comments on the proposed rate increase can be made through Feb. 8. Comments should reference Docket 12-WSEE-112-RTS and sent to the Kansas Corporation Commission, Office of Public Affairs, and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027. Comments may also be submitted by email at through the KCC website,, or by calling 1-800-662-0027 or 785-271-3140.


JayhawkFan1985 5 years, 12 months ago

Contrast his salary with that of our three most recent governors...Sebelius, Parkinson and Brownback all of whom made less than $150,000 per year. There is something wrong when corporate executives get paid at a rate exceeding ten times that of government executives that have more responsibility and perform their jobs in the spotlight to a far greater degree. The private sector needs to be reigned in far more urgently than does government...

parrothead8 5 years, 12 months ago

While I agree with you, I need electricity far more than I need politicians.

just_another_bozo_on_this_bus 5 years, 12 months ago

I'll wager we could/would still have electricity even if the CEO's and other execs made a fraction of their current income-- it'd just be a little cheaper.

budman 5 years, 11 months ago

I'd say the private sector faces a lot more discipline then the public. If you had a government run utility you'd certainly pay less in salary but way more in inefficiency.

Zac Hamlin 5 years, 12 months ago

Too bad we don't have cooperative utilities, we could have a comment and a vote.

gseibel 5 years, 12 months ago

LIES!!! The audio is obviously doctored. It doesn't match his mouth. He said WOULDN'T necessarily make rates skyrocket

Susan Mangan 5 years, 12 months ago

I assume that response was sarcasm...I hope.

You don't have to like what was said, but even Obama will admit he said that.

gseibel 5 years, 12 months ago

ok. I stand corrected. The words really didn't match his mouth... must have been YouTube lag. I doubt this is his position anymore. There are things that can be done to cut carbon emissions at a reasonable price. Besides, the changes he was talking about in this interview haven't been passed by Congress so they can't be blamed for Westar's rate request.

progressive_thinker 5 years, 12 months ago

The article is pretty interesting and points out that there is a wide divergence of estimates in just how expensive this will be. You are correct, nothing was passed by congress, so this really has nothing to do with the Westar request for rate increase.

Actually, the comments were made when he was candidate Obama; given that he was ultimately elected, at least some of the voters were open to considering the concept at the time.

Have a great evening.

Jayhawk1958 5 years, 12 months ago

sorry but this is one industry that needs to be regulated by the government.

gseibel 5 years, 12 months ago

Anyone remember this:

Kansas City Business Journal Date: Friday, August 5, 2011, 10:14am CDT

David Wittig will receive approximately $39.1 million from the Topeka-based utility as part of a settlement.

Leonard Allen, a spokesman for Westar, confirmed the settlement. Allen had no further comment on the settlement, other than to point out that stockholders would foot the bill for the Wittig settlement, not ratepayers.

In May, the company said it would pay Lake $26.3 million.

That's $65.4 million out of shareholder dividends. On 117 million outstanding shares that's about 56 cents per share. The total deducted so far? 0. None. Not one penny. 2009 dividends: 30 cents every quarter. 2010 dividends: 31 cents every quarter. 2011 dividends: 32 cents every quarter.

So I say not one penny in rate increases until the shareholders take their hit.

gseibel 5 years, 12 months ago

BTW, the 10.6% return on equity number is also a sham. The average yearly return over the last two years including share price change and dividends is already 21.5%. On an industry with prices guaranteed by the government. And they want more, in this economy.

Over the last 4 years their profits have increased 18.5% while inflation totaled only 8.6%. That wasn't by running the corporation more efficiently, it was by extracting rate increases from the KCC. This one needs to be stopped.

Jaminrawk 5 years, 12 months ago

Complete joke. Everything gets more expensive and the cost of living keeps going up as unemployment stays pretty high and people are still losing their houses. Glad the Westar executives can afford their timeshares though.

imastinker 5 years, 12 months ago

Can anyone explain the use of the term "return on equity" rather than "return on investment?"

To me, use of the term would indicate use of leverage to purchase the stock, so the equity position may be a percentage of actual value.

jafs 5 years, 12 months ago

Good question.

I'm actually planning to call Westar and get some more information - it looks like they might be a very good thing to invest in!

imastinker 5 years, 12 months ago

Please let me know what you found out. I have considered investing in Westar, but there are probably other energy companies that would be better to invest in right now.

gseibel 5 years, 12 months ago

Return on equity is from the corporation's perspective, based on net income. It can be paid out as dividends or reinvested (with the expectation of growth and higher stock prices). Return on investment is from the shareholder's perspective, stock price gains plus dividends paid. It should all come out about the same over time.

imastinker 5 years, 12 months ago

So they used the 10.6% number because it was more dramatic than the return on investment number that most investors are interested in.

gseibel 5 years, 12 months ago

Actually it's less dramatic than the 20+% average ROI over the last 2 years. Westar is the one putting that number out there so it's better for them. Also ROI is unknown if you don't know what the stock price will be in a year. Return on equity is forecast net income divided by current market valuation of the company. But the whole approach to setting profits thru setting rates is entirely backwards. Stock value should be based on expected profits, not the other way around. If they set a high target return and receive a rate increase to support it, that will push the stock price up, which then reduces the return on equity (it increases the market valuation in the above formula). Does that mean they get another rate increase to increase profits and push the return back up.....resulting in another rise in the stock price thereby pulling the return on equity back down... which means..... you get the picture.

somedude20 5 years, 12 months ago

"This case is really about providing reliable service to our customers." So if this goes through, and I am sure it will, if a "bird" or alien crashes into a transformer, will the rate payers get a rebate? I hate to say it but look at the govt and see how they are (trying to) cutting the budget because times have changed and we aint rich no more. We just had a rate increase the other year and let me tell ya, these bills are already too high! The electricty is too damn high!

nut_case 5 years, 12 months ago

Meh - my first bill with the new 'smart meter' showed 33% higher 'usage' than the same month last year. That is enough 'rate increase' for me.

jafs 5 years, 12 months ago

Was it accurate?

If not, did you complain to the company about it?

gseibel 5 years, 12 months ago

Can anyone tell me why this article doesn't appear when i search the LJWorld website for "Westar"? Is it just too new?

jafs 5 years, 12 months ago

The LJW search function is quite poor, in my experience.

just_another_bozo_on_this_bus 5 years, 12 months ago

The JW's search function often doesn't work well on what would seem to be fairly straight-forward searches.

Alex Parker 5 years, 12 months ago

It's true. We recommend using Google with ljworld and your other keywords, and hopefully the search function will improve in the future.

just_another_bozo_on_this_bus 5 years, 12 months ago

The JW isn't alone in this. Many, if not most, websites have similar records of success with their search functions

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