Archive for Monday, February 6, 2012

Westar, KCC staff file settlement that would increase electric rates by $50 million

February 6, 2012, 8:54 p.m. Updated February 7, 2012, 9:15 a.m.


— Westar Energy would receive a $50 million rate increase under a proposed settlement announced Monday.

The proposed agreement was filed by the staff of the Kansas Corporation Commission and Westar. It will next go to the three-member KCC for consideration.

David Springe, consumer counsel of the Citizens’ Utility Ratepayer Board, said that the settlement was too high and that CURB will fight it.

Westar had initially sought a $91 million electric rate increase. KCC staff had recommended a $33.6 million increase, while CURB recommended a rate decrease of $11.6 million by reducing shareholder profit and executive bonuses.

Officials with Westar, the state’s largest electric company in Kansas, had said the increase was 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.

Under the proposed $50 million increase, approximately $41 million would be paid by residential and small business customers with the remainder spread to larger businesses.

The proposed agreement would also allow a 10 percent shareholder profit.

“If there is one thing we heard very clearly from Westar’s customers at the public hearings is that a 10 percent shareholder profit is simply unacceptable in these difficult economic times,” Springe said.

Springe urged customers to contact the KCC and ask them to throw out the settlement. The email address is Mail can be sent to Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027. Reference KCC Docket No. 12-WSEE-112-RTS.


Ron Holzwarth 5 years ago

"The proposed agreement would also allow a 10 percent shareholder profit."

That is outrageous!

Prime Interest Rate: The Current Wall Street Journal Prime Rate is: 3.25%

January 25, 2012: The FOMC has voted to keep the target range for the fed funds rate at 0% - 0.25%. Therefore, the U.S. Prime Rate remains at 3.25%.

And the shareholders want a 10% return.

Maybe it's time to buy WS (NYSE), the current price is $28.81 per share.

Ron Holzwarth 5 years ago

Maybe it's not a good stock to buy.

"Westar Energy (NYSE: WR)‘s stock had its “sell” rating reiterated by research analysts at Goldman Sachs (NYSE: GS) in a report issued on Tuesday."

Phase 5 years ago

Thanks for the link ---- the compensation numbers for the company execs is eye opening.

Ron Holzwarth 5 years ago

That is because Rolls Royces and Ferraris are expensive.

Ron Holzwarth 5 years ago

This is just about unbelievable: "Westar Energy, Inc. announced that the Board of Directors declared a quarterly dividend of $0.32 per share payable April 1, 2011 on the Company's common stock. The new dividend is 3% higher than the Company's previous quarterly dividend of $0.31 per share, and results in an indicated annual rate of $1.28 per share." Clipped from:

The stock is selling for only $28.81 a share! So, if the present trend continues, owning a share will result in a 4.44% return, plus a possible capital gain. You can't get anything like that by putting your money in a bank. And, the electric company is not going to close.

But, that 4.44% might be wrong now, because "The proposed agreement would also allow a 10 percent shareholder profit."

Think about that the next time you look at your electric bill.

Ron Holzwarth 5 years ago

Recommend selling when the return on WS is 4.4%, with a possible upcoming increase? I wonder what returns other stocks are yielding.

littlexav 5 years ago

ROE/ROI are not the same things as "profit." It's a mis-print by the newspaper.

jafs 5 years ago

I seriously considered that, and discussed it with our accountant.

He pointed out that while the dividends are a guaranteed percentage of the stock price, the stock price may vary widely.

So it's not as safe an investment as one might think.

littlexav 5 years ago

Amen. I used to hold stock for dividend payments irrespective of the performance of the underlying stocks until my financial advisor pointed out that it's not worth a 4-5% "return" if the stocks are tanking and you can't recoup your initial investment.

Richard Heckler 5 years ago

That is a whopper of a tax increase.....

I've always been under the impression that corp america opposed tax increases.

Guess I've been living under an illusion. This is a $50 million tax increase any way you look at it.

A perfect example of privatization at work...

ENGWOOD 5 years ago

TREE HUGGERS!!!!!!!!!!!!!!!!!!!

Lawrence Morgan 5 years ago

Lawrence should have had its own electric power a long time ago.

Did they ever have their own electric power plant, like Baldwin still does/

avoice 5 years ago

Baldwin has the highest utility rates around. They buy from several providers in addition to having to maintain and operate their own power plant. The City touts "reliability" as the justification for the high rates.

Lawrence Morgan 5 years ago

Lawrence should have had its own electric power a long time ago.

Did they ever have their own electric power plant, like Baldwin still does?

LogicMan 5 years ago

You should look at what they are paying, as compared to Westar, and I think you'll be surprised. And ask them about reliability too. Leave the hard stuff to the pros.

If you really want rates to be kept under control, repeal the requirement for X% of the electricity to be from wind, sun, etc. Coal and natural gas are much, much cheaper and far more reliable.

Bob_Keeshan 5 years ago

Or reduce executive bonuses and lower shareholder profit and rates would be more than kept under control, they'd go down.

This increase has nothing to do with a renewable requirement and everything to do with Westar's current inventory of coal fired plants.

just_another_bozo_on_this_bus 5 years ago

"Coal and natural gas are much, much cheaper"

Only if you don't count all the real costs. In other words, what you typed is a bald-faced lie.

LogicMan 5 years ago


Hey, that's not only racist, it's speciesist.

You're not counting the real costs of wind, etc. either - they often use prime ag land, have notoriously short lives, require lots of maintenance, are expensive to remove, etc. Their effects on wind patterns are just becoming apparent, like increasing the heat island effect in nearby cities.

Not to mention that their true capacity is nothing like the nameplate. Often less than 20% on average.

Usually there's little wind on those hot days when we need power the most. Fire up them thar natural gas generators!

But the real way to have more power is to reduce our use, via energy savings. Increasing the cost is another way to promote less use, but I doubt that's part of this plan.

Cai 5 years ago

Even if this statement were true, that doesn't give westar execs the right to count on a 10% stock increase when the norm is so far below that.

That doesn't mean it's right for US to have to pay for the retired CEO's 'dwindling' stock portfolio.

The move to natural resources may cost more to me the consumer right now, but I'm far more willing to put funds into the requirements (and thus continued improvements of) these renewable resources than I am to put funds into a power monopoly's vacation fund.

LogicMan 5 years ago

"10% stock increase"

I just looked at their long-term share prices and dividend. Currently they pay 4.5%, and the share price is slowly recovering from 2007's mayhem, but not even close to before the prior CEO mess.

I doubt they are planning to increase their dividend to 10%. Maybe the planned investments with the proposed rate increases were evaluated with a 10% rate of return? If so, that's just applied to a tiny part of their portfolio.

Cai 4 years, 12 months ago

To be fair, I simply took the 10% from the letter:

"The proposed agreement would also allow a 10 percent shareholder profit."

I did not check to see what that piece would actually apply to or mean.

littlexav 5 years ago

I'm glad you're so well-informed on the dynamics of competitive wholesale power sales, but why don't you leave policy determinations to the pros. Would you rather have a $2B coal plant or a couple of $100M wind farms? THXBYE.

LogicMan 5 years ago

"I'm glad you're so well-informed on the dynamics of competitive wholesale power sales"

Well, actually.

A large coal, natural gas, or nuke plant, except for maintenance periods, can run all day and night, 24/7, at 100% capacity, if desired. And crank out power in the many hundreds of megawatts.

A windfarm will be much, much lower real capacity, and not provide on-call power. Nor a solar plant. The wind and sun are fickle. So every regulated utility must have conventional backup for these, or contracts to buy power from others with reliable sources, so we're paying double or more for the same generation capacity.

Richard Heckler 5 years ago

I'd say take a close look at CEO and other upper management pay packages, pay out's to shareholders and golden parachute opportunities.

Also special interest contributions to politicians...

Shane Garrett 5 years ago

American Greed at work again. Think I'll stock up on candles and lamp oil.

deec 5 years ago

Even if you don't use your utilities, you still must pay the monthly basic charge. I think it is against code to live in a house without utilities hooked up, so it is basically a tax.

drake 5 years ago

You doofs keep piling on environmental restrictions and regulations and then cry when they have to raise your rates to comply. Priceless.

jafs 5 years ago

I'm all in favor of environmental regulations, and don't mind paying a bit more to ensure the environment is cleaner, and more well protected.

However, I suspect there are a lot of other factors involved in this rate increase, many of which I don't support, like a guaranteed 10% return for investors.

ENGWOOD 5 years ago

New enviromental regulations are going to bite you in the BUTT!!!! FUNNY!!!!!! Hello Jeffery EC................... Better start storing those cow chips. Love it !!!

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