Topeka — As state regulators consider Westar Energy’s proposed rate increase, which would give shareholders a 10 percent profit, AARP Kansas is stepping up calls for people to oppose the decision.
“AARP understands that essential utility service cannot be provided at a loss,” said AARP Kansas Director Maren Turner.
“However, the rate of return on investment for utilities should be fair and reasonable, and not a dime more. There is simply no justification to award Westar stockholders excessive profits which will be coming out of the pockets of struggling Kansas families,” Turner said.
The staff of the Kansas Corporation Commission and Westar filed a proposed settlement agreement that would give Westar a $50 million rate increase. According to the agreement, $41 million of the $50 million, would be paid by Westar’s residential and small business customers.
The other $9 million would be paid by larger customers, such as Kroger, Walmart, Boeing, Spirit Aerosystems, Cargill Inc., Hawker Beechcraft, Coffeyville Refinery and Occidental Chemical, all of whom are supportive of the agreement or not opposing it.
Westar, the state’s largest electric utility with more than 650,000 customers, had initially requested a $91 million rate increase. The Citizens’ Utility Ratepayer Board said Westar should decrease rates by $11.6 million. CURB recommended a reduction in the shareholder profit to 8.85 percent, and removal of $13 million of management incentive and bonus compensation pay.
On Monday, the three-member KCC will start an evidentiary hearing on the rates.
Westar officials have argued for the increase to maintain a reliable system, expand a tree-trimming program to reduce the number of power failures caused by tree limbs falling on power lines, comply with environmental regulations and help Westar’s employee pension fund, which was hurt by stock market losses.
Gina Penzig, a spokeswoman for Westar, said, “The settlement is a balancing of interests and will allow us to continue to provide reliable service to our customers. We’re pleased that a compromise was reached that most parties could find agreeable.”
Even without the proposed increase, Westar is on track to have increased rates by $388 million from 2009 to the end of this year, said David Springe, consumer counsel for CURB. These increases included previously approved rate increases and pass-through charges to customers for additional transmission and environmental costs.
Under the proposed settlement, an average customer will see an increase of nearly $6 per month in the summer and nearly $4 per month in winter, Springe said.
To contact the KCC’s Office of Public Affairs and Consumer Protection about Westar’s rate increase e-mail firstname.lastname@example.org. When contacting the KCC about the Westar request, consumers should reference the case by using KCC Docket No.12-WSEE-112-RTS.