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Archive for Sunday, September 4, 2011

In bad economy, Westar rates rise

September 4, 2011

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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 $90.8 million or 5.85 percent.

— Source: Westar Energy

— Westar Energy ratepayers have been hit with $265 million in rate increases during the worst economy in decades. Westar now wants more.

The largest electric company in Kansas has filed a request with the Kansas Corporation Commission for a $91 million rate increase, which if approved would increase the average residential customer’s bill by approximately $6.50 per month, or 5.8 percent.

“It’s causing quite a hardship on consumers,” said David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board, which represents consumers in rate cases.

Springe said the three members of the KCC will have to determine “what are those things that are necessary to providing necessary and adequate services and where does the commission have discretion to trim Westar back because the consumers need a break.”

Westar officials have said the increase is needed to maintain a reliable system, comply with environmental regulations and keep its commitments to employees.

About $20 million of the proposed increase is to expand a tree-trimming program to reduce the number of power failures caused by tree limbs falling on power lines.

Another $37 million is needed to help Westar employees’ pension fund, which was hurt by stock market losses.

Gina Penzig, a Westar spokeswoman, said the company is concerned about the current economic climate, but added the utility has to balance its costs and charges to maintain a healthy company.

“The cost of doing business for us is increasing,” she said.

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.

Under state law, the rate increase request must be acted on by the KCC within 240 days. That means the case will be decided no later than April 2012.

The KCC is expected to schedule public hearings on the rate request either later this year or early next year.

Westar won’t be through when this request is settled. The KCC has approved a plan by Westar and Kansas City Power & Light to retrofit the La Cygne power plant at a cost of $1.2 billion, split between the two companies.

Once completed, the KCC will review how much of those costs are recoverable through rates.

Comments

BlackVelvet 3 years, 3 months ago

Of course. They figure they have to pay David Wittig millions of dollars. so they will pass that along to their customers...Why not? other big businesses do it all the time. Screw the rate payers. Do it! Again and again. What are they gonna do? go without electricity? of course not. They will pay and pay and pay....so screw them...over and over and over.....

matahari 3 years, 3 months ago

Ditto @ Black Velvet comment. If it weren't for the damned refrigerator, I'd think of going to lamps, candles and quilts. Seriously!

lionheart72661 3 years, 3 months ago

Compensation for 2009 Salary $630,000.00 Bonus $0.00 Restricted stock awards $448,500.00 All other compensation $12,125.00 Option awards $ $0.00 Non-equity incentive plan compensation $0.00 Change in pension value and nonqualified deferred compensation earnings $347,758.00 Total Compensation $1,438,383.00 Options Granted This is what I found on the CEO of Westar from 2009!

Ron Holzwarth 3 years, 3 months ago

That's not very much money. Have you checked the prices of Rolls Royces and Ferraris lately?

question4u 3 years, 3 months ago

"Westar officials have said the increase is needed to maintain a reliable system, comply with environmental regulations and keep its commitments to employees....Another $37 million is needed to help Westar employees’ pension fund, which was hurt by stock market losses."

Westar recognizes "commitments to employees" and the "employees' pension fund"?

We all know that corporations don't observe such things, and that's why those state employees with their "cushy" jobs at lower than competitive wages, no salary increases in years, and underfunded pensions soon to be switched to 401k plans would never consider leaving state employment to work for a company like Westar. The state of Kansas doesn't pay as much, doesn't demonstrate commitment to its employees and isn't going to meet its obligations to KPERS, but why would anyone rather work for Westar or any other corporation that values its employees?

just_another_bozo_on_this_bus 3 years, 3 months ago

How much does Westar pay out in dividends each year?

just_another_bozo_on_this_bus 3 years, 3 months ago

What's your point? That in a regulated monopoly the profits of the investors is irrelevant to the rates charged to a captive customer base?

Scott Tuley 3 years, 3 months ago

The rate payers must pay more because the stock market hurt their pension fund, who's going to help me with my 401k?

kinder_world 3 years, 3 months ago

I agree. My pension fund has lost money same as theirs. Just means we are all going to work longer. I do not want to work longer to fund their pensions, not my responsibility. Since when are we on the hook for Westar pensions when everyones pension lost value. Talk about DUMB excuse for price increase. WIll the KCC be silly enough to allow this?????

Jean Robart 3 years, 3 months ago

So Westar is committed to their employees. That's fine. But why aren't they also committed to their customers in the slow economic times?

Richard Heckler 3 years, 3 months ago

Make the white collars pay their legal expenses instead of screwing ratepayers again.

There is logic behind nationalized energy and booting the white collar screw ups. Ratepayers cannot afford shareholders,golden parachutes and special interest spending on political campaigns.

LadyJ 3 years, 3 months ago

"Westar officials have said the increase is needed to maintain a reliable system" Umm, shouldn't this be what they should have been doing all along? Everybody's retirement has taken hit, no one group should get special treatment at the expense of people who cannot already afford it. If we try to use less electricity, they will raise the rates to make up for it, which is exactly what this is really about. It is because we cannot afford our electric bill now and we have tried to lower them by using less. Westar is not going to stand for this loss of profit. That is what the rate increase is about, not trimming trees. Maybe the LJW could publish pictures of the houses the Westar executives live in.

Ron Holzwarth 3 years, 3 months ago

"Maybe the LJW could publish pictures of the houses the Westar executives live in."

The pictures of the houses would only show you if they are nouveau riche or are wise with their money.

It would be meaningful only if the pictures of their houses were accompanied with pictures of their cars and the details of their investment portfolios.

Richard Heckler 3 years, 3 months ago

Westar should cut back on CEO salaries,eliminate golden parachutes,eliminate spending on political campaigns and ask shareholders to take a break. The bottom line needs to look good to shareholders or else Wall Street investors take a hit . So what I say that is a risk that accompanies Wall Street.

The CEO's and BOD's need to put profits back into the plants instead of coming to the ratepayers.

Now ratepayers prepare thyselves:

Ratepayers are on the hook to finance and insure energy plants. These plants are too expensive and toxic to gain backing from conventional financial sources = very high risk. Yet government signs on to this nonsense in the name of ratepayers.

It seems to me we own these nasty critters yet get duped on rates at the same time we taxpaying rate payers finance the industry. Can we say screwed again?

Richard Heckler 3 years, 3 months ago

Perhaps pension funds should not be invested into Wall Street?

During the 20th century, there were several periods lasting more than 10 years where the return on stocks was negative. After the Dow Jones stock index went down by over 75% between 1929 and 1933, the Dow did not return to its 1929 level until 1953. In claiming that the rate of return on a stock investment is guaranteed to be greater than the return on any other asset would be a lie.

There is a commonly accepted myth that buying stock in the stock market provides funds directly to businesses that they can use for new investment. This is completely incorrect.

Only when someone buys stock that is part of an initial public offering (IPO) does the money go directly to the firm. If you were to buy a share of Microsoft stock tomorrow, the money you pay would go to the owner of that stock and not to Microsoft.

If a large number of people were to suddenly enter the stock market, it would drive up the selling price of stock and create a windfall for those who currently own stock, but it would not provide a penny to the firms whose stock is traded.

Economists Dean Baker and Bob Pollin did a study a decade ago during the IPO boom that illustrates this distinction. They found that for every $113 in stocks traded, less than one dollar actually went to businesses to finance real investment.

jafs 3 years, 3 months ago

That's fine, but where would you suggest they be invested instead?

Ron Holzwarth 3 years, 3 months ago

The answer is obvious.

Bernie Madoff.

Oh, to late for that!

Liberty275 3 years, 3 months ago

Welcome to the forum comrade. Be careful though because in soviet America, forum writes on yuo.

Ron Holzwarth 3 years, 3 months ago

Behold, upon the glorious dawn of Socialism, all secrets will be revealed, and all anonymity will be lost.

And then the purging will begin.

Ron Holzwarth 3 years, 3 months ago

You might look into it, and then you will discover that would be a Pyrrhic victory, considering the present costs of those systems and the fact that they are much less reliable than Westar.

You would be better off investing in a backup generator.

There is a bright side to the present situation, and that is the fact that when the electricity goes out, the meter stops. At least I hope so.

sciencegeek 3 years, 3 months ago

I have never understood why utility companies work under a separate set of rules from other companies. When other companies have increased costs, lower dividends from drops in the stock market, which also causes a hit on the pension fund, the other companies cut costs, pay lower dividends to stockholders, suspend employee raises, cut employee benefits--the list goes on.

BUT--when the same things happen to Westar, they don't want to absorb any losses. They go running to the KCC for a rate increase, which they always seem to get.

maybe if they had to account for their bottom line, like other companies, they'd be more efficient, and exercise some oversight, unlike what they did in the Wittig and Lake debacle.

Ron Holzwarth 3 years, 3 months ago

If Windstar had to account for their bottom line, there is the ever present danger that they would take the wise route when the company outlook looks grim.

That is, shut everything off, and have a massive auction of the tangible assets of the company.

One of the biggest tangible assets Windstar has is the scrap value of the towers, and the steel and copper of the electric cables to everyone's home. Also, they would also have quite a few rather desirable pieces of real estate to sell.

It would take less than a week for the scrap metal companies to remove it, and at least many months to replace it.

That is, if any company cared to make a huge investment in an attempt to enter that business again. If not, everyone would have to buy their own generators.

Flap Doodle 3 years, 3 months ago

merrill's forgetting that attribution thing again. Plagiarism is killing the planet.

just_another_bozo_on_this_bus 3 years, 3 months ago

Good thing he has a wart on his butt to remind him of these things.

newmedia 3 years, 3 months ago

Why not. The cost of just about everything else has gone up in the past year. Yes, I know they don't count food and energy when computing inflation. What a farce....

Sunny Parker 3 years, 3 months ago

Complain about Westar raising the rates...but you all think it's great that our taxes are going up to pay for an 18 million dollar library, the Empty-T, renovations to empty buildings, etc....

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