Archive for Tuesday, July 9, 2013

Westar Energy’s proposal would increase rates for homes and small businesses, but decrease rates for big businesses

July 9, 2013


— The public will have its say this week on a proposal by Westar Energy to increase rates on average residential customers by $7.50 per month while cutting rates for major industrial and commercial businesses.

The proposal would increase Westar's revenue by $31.7 million. It would raise residential bills by 8.8 percent and small businesses by 6.2 percent, while decreasing industrial bills by 8.4 percent and bills that public schools pay by 7.6 percent.

A public hearing on the proposal is set for 6 p.m. Thursday at the Kansas Corporation Commission, 1500 S.W. Arrowhead Road.

Westar says it needs the rate increase to meet EPA-required upgrades at the coal-burning La Cygne power plant.

And Westar says it needs to shift the rate-structure burden because big business customers are paying more than their fair share.

“Electricity provides great value, and we are looking to the commission to allow us tools that help keep it affordable as costs rise," said Mark Ruelle, president and chief executive officer of Westar. "First, we need to make sure rates are fair and reflect the cost of providing service to each type of customer."

The Citizens' Utility Ratepayer Board, which represents residential customers and small businesses, says the proposed increases are way out of line.

"Small-business owners, those people up and down Massachusetts Street, should be hopping mad," said David Springe, consumer counsel for CURB. "This is a big impact on the small mom and pop stores."

Since January 2009, Westar has received 18 increases for a total of $469 million.

The KCC hearing in Topeka will also be available via video conference at three more sites: Kansas State University-Salina, Pittsburg State University and Hutchinson Community College.

The KCC will accept written comments from the public through Sept. 23. Comments regarding the case should reference Docket No.13-WSEE-629-RTS and should be sent to the Kansas Corporation Commission Office of Public Affairs and Consumer Protection, 1500 S.W. Arrowhead Road, Topeka, Kansas 66604-4027. Comments may also be submitted by email to

The KCC has until Dec. 2 to make a decision.

Springe urged consumers to submit written comment to the KCC if they are unable to make the meeting.


jimmyjms 4 years, 11 months ago

"And Westar says it needs to shift the rate-structure burden because big business customers are paying more than their fair share."

How are they paying more than their fair share? Because you said so? Howsabout some detail there, Mark?

"First, we need to make sure rates are fair and reflect the cost of providing service to each type of customer."

Somehow, I'm doubting that parity is the real goal here.

chootspa 4 years, 11 months ago

What did the survey question even say? I've stopped reading them and started just clicking buttons.

Liberty275 4 years, 11 months ago

Maybe someone that knows will post the different rates and fee structures. It might even be a reporter.

avarom 4 years, 11 months ago

No worry you all are just paying the charges for your new Smart Meters. Wait until you get your water bill, for the Fracking Charges...or Frac outs.....Heads up Farmers...retain those minerals right.....s if you allow Fracking on your land.

elliottaw 4 years, 11 months ago

If big business wants to lower their bills they need to find their own way to do that not go I to my pocket

Maddy Griffin 4 years, 11 months ago

My bill goes up every summer already. I do not need another rate increase. Why is it that "big business" is always getting the break? Let the businesses deal with it. I don"t make a profit from my home, why should I have to foot the bill for theirs?

Ron Holzwarth 4 years, 11 months ago

Of course your electric bill, and all of your other bills also, seem to be going up every year. But, a large part of that is because the value of the dollar is decreasing due to inflation. If you were paying your bills with gold instead for the last few years, you would notice that your bills have been going down every year for quite a while.

chootspa 4 years, 11 months ago

And then you would notice the bills skyrocketing in April when the gold market crashed.

Mike1949 4 years, 11 months ago

It is just another way for big business to make more profit on the backs of every one else! I would like to see an investigation into who sets these rate goals, how much big business is winning & dinning Westar to come up with these proposals! I wonder how much money is flowing under the table?

Bill Griffith 4 years, 11 months ago

The chairman of the KCC is a Brownback appointee who believes that the corporations should be the guiding light when the KCC examines a rate case. I am paraphrasing but that is his philosophy. Since Brownback is tied closely with the Kochs, this philosophy merges quite nicely with what they desire. This should save the Kochs a great deal of money at their Wichita businesses.

Richard Payton 4 years, 11 months ago

According to the Dow big business should be bringing in record profits. Why now stick it to the little guy and gals? Is this the shovel ready jobs promised? Digging are own grave.

tomatogrower 4 years, 11 months ago

Because the new religion is money. Record profits aren't enough. They want more.

mdlund0 4 years, 11 months ago

LJWorld: what are the rates per kW-hr that "big-business" and residential customers pay? Without knowing that, it is impossible to judge the assertions being made.

mdlund0 4 years, 11 months ago

What are the rates per kw-hr for each? Information vital to making a judgement...

patkindle 4 years, 11 months ago

big guys won , little guys lost we are doomed get out your tin foil hats, Obama will ride to the rescue and save the downtrodden again

Lisa Medsker 4 years, 11 months ago

Lookin' more 'n more like a Brownie Utopia, like Texas, huh? Yeeeehaaaw!

Richard Heckler 4 years, 11 months ago

Cut the CEO's pay package by 75% to prevent further reckless spending

Remove the Golden Parachutes from the budget = stop spending recklessly

Remove all political campaign donations from the budget = stop spending recklessly

Cut all advertising $$$$$$ from the budget = stop spending recklessly

Cut all executive jets from the budget then sell off the jets

Cut BOD's salary packages by 75% !!!!!!

Quit taking politicians to dinner and drinks!!!

Do not sponsor any athletic events!!!!!

Now Westar is managing in a fiscal responsible manner thus eliminating the need for any rate increase.

Richard Heckler 4 years, 11 months ago

One more item.

Remove lobbyists from the budgets.

Bill Griffith 4 years, 11 months ago

Correct-although CURB does try but they are under-budgeted and out-manned.

bevy 4 years, 11 months ago

Come on guys, if they jack up our rates too much, we can just take our business mind!

Another fact missing from this story - what profits has this utility, which is essentially a monopoly, posted with all these rate increases the past 4 years? What are they using these profits to do? Other than buy politicians and pay their executives huge salaries?

Ron Holzwarth 4 years, 11 months ago

Westar (WR) is traded on the New York Stock Exchange (NYSE), so the company profits are public information, and that information is used by individuals who are considering purchasing WR stock. You can look at WR's profits on their income statement here:

A large part of the profits are distributed to the shareholders.

Ron Holzwarth 4 years, 11 months ago

I strongly suspect that is opinion and not fact. Do you have a source for that claim? Anyone can buy WR stock, it's publicly traded.

deec 4 years, 11 months ago

Major Direct Holders (Forms 3 & 4)

Holder Shares Reported

MOORE WILLIAM B 117,095 Jan 31, 2012

RUELLE MARK A 143,488 Mar 14, 2013

WAGES LEROY P 11,207 Feb 27, 2013

IRICK LARRY D 67,517 Mar 26, 2013

CHANDLER CHARLES Q IV 62,059 Jan 1, 2013

Richard Heckler 4 years, 11 months ago

Daily CEO Pay Now Exceeds U.S. Workers Annual Salary. And CEO’s sometimes do even better when they quit. What a rip off for consumers. We're looking at one aspect of why the cost living increases beyond reality. CEO's should work for a flat $750,000 a year or less. Consumers cannot afford CEO's , golden parachutes etc etc etc etc etc.

Take for example, James Mulva of ConocoPhillips. He was paid $140.8 million in 2011 but topped that in 2012 when he left the company after 10 years as CEO. Once he cashed out his stock options, took his retirement bonus and got his final paycheck, he collected a whopping $260 million in 2012.

Additionally “golden parachute” arrangements have had a negative impact on corporate performance, say experts. “If you have a safety net of this type of gargantuan size, it starts to undermine the CEO’s desire to build long-term value for shareholders,” Paul Hodgson, a director at corporate governance researcher at BHJ Partners, told Bloomberg. “You don’t really care if you’re fired or not.”

Way more to this nonsense.

jafs 4 years, 11 months ago

I called the KCC and made my thoughts known, and also got some more information.

The rate increase requested is a sort of mish-mash of things that make sense that I support, and others that I don't support.

I encourage everybody who is concerned about this to do the same.

Jeremiah Jefferson 4 years, 11 months ago

This is class warfare, nothing more, nothing less

Ron Holzwarth 4 years, 11 months ago

It might be a struggle between the savers and the spenders. You are free to save up your money and buy Westar stock, and then you will receive dividend checks with which you can buy even more stock. One share is $32.07 as of today.

Or, you could spend all of your money on things that will not give you a return, which is exactly what most people seem to do.

Tammy Copp-Barta 4 years, 11 months ago

Or you could use that money to pay your huge electric bill!!! Who has money left over to BUY stocks?!?!

parrothead8 4 years, 11 months ago

All the more reason to install some solar panels and generate some of our own electricity.

chootspa 4 years, 11 months ago

Would be even better if our state encouraged such behavior. I'd love some grid-tied solar panels on my roof.

jafs 4 years, 11 months ago

I believe that you can implement a grid tie system in KS.

Ron Holzwarth 4 years, 11 months ago

I know you can in Missouri, I know a man who has solar panels installed on the roof of his carport. He can sell electricity back to the electricity company, but that's not a major savings. His major saving is that he leaves his air conditioner on full blast all summer long, and his electric bill is almost nothing.

But, what he never told me is what it cost to install the system. I am sure it was very expensive, and he is realizing no net financial gain from the system, even over a period of decades. But he doesn't care about that, he's a person of means, and he had it installed for ecological reasons.

chootspa 4 years, 11 months ago

Yes, you can install a net-metered system on your own dime, but the cost to entry is still extremely high, and the state doesn't offer incentives and programs geared toward residential customers. Most incentives are geared toward farmers or businesses that want to start wind farms.

They've also been giving decidedly mixed messages recently to industry about green energy, so there's not much incentive for consumer solar panel companies to start moving out here and selling their services to consumers.

jafs 4 years, 11 months ago

Just sayin' - if you want to do it, you can do it.

And, there are still federal subsidies for solar power, if I remember right. Last time I checked, it would have cost us about $10-$15K with the subsidies. But, then, of course, you don't have any more utility bills, and you can feel good about your carbon footprint (at least that part of it).

Cromwell used to have a solar energy company in Lawrence - is that gone?

chootspa 4 years, 11 months ago

When I looked, I think the estimate was higher if you wanted it grid-tied, and you have to pay for installation. It's been a while, so maybe the price has gone down, but I guarantee you this state doesn't offer rebates for home customers.

BTW, if you generate more energy than you use, Westar gets to keep it and doesn't have to pay you a dime for it.

jafs 4 years, 11 months ago

There are federal subsidies, even if no state ones.

Grid tie is cheaper than batteries, since you don't have to buy the batteries.

Yes, that's the way almost all grid tie systems work, as far as I know. Excess production isn't reimbursed, and it's zeroed out at the end of the year. Means that there's little incentive to produce more than you use, but that's also cheaper, since you aren't paying for a larger system.

Overall system prices depend on how much energy you use - we're a very conservation oriented and mindful small household.

Bill Griffith 4 years, 11 months ago

Actually, if you want to ding Westar the hardest make sure you have the new LED bulbs in your home, use fans instead of a/c when bearable, and buy energy efficient appliances when it it time. This will cause your bill to go down as the rate goes up. Then purchase some solar panes-by law Westar has to accept your power into their system under the net metering statute that the private utilities hate but have to comply with.

Ron Holzwarth 4 years, 11 months ago

The solar panel systems you are talking about are freely available on the market, and it is true that the electric company will then buy electricity from you. But you need more than solar panels, you also need inverters and a computer system to operate the system. None of it is cheap.

The bottom line - the systems sell for tens of thousands of dollars. How much money do you think you are going to save with one?

Ron Holzwarth 4 years, 11 months ago


Westar's net profit margin for Q1, Mar '13 was only 9.75%, compared with 12.49% for all of 2012. That compares very favorably with many other businesses. But, this decrease needs to be corrected with a rate increase, in the interests of the shareholders.

Definition of profit margin (noun):
The amount by which revenue from sales exceeds costs in a business.

Westar (WR) is an excellent stock to own because the company is distributed across several states, types of power generation, its customers usually have no other choice for their electricity needs, and it has been consistently very profitable for many years. I can't bring the page up at the moment, but I clearly recall reading that if you had invested $100,000 in WR only ten years ago, the sum of the dividends and the increase in the stock price would now add up to almost $400,000.

WR is an excellent stock to own, and as of today, the share price is $32.07. I highly recommend it.

jafs 4 years, 11 months ago

While Westar and other similar energy companies may be good investments, they're not likely to earn 30% a year over a ten year period.

I looked up Westar's ten year average and it's about 10%, which means that $100K would now be $200K, not $400K, which makes a lot more sense.

Ron Holzwarth 4 years, 11 months ago

TOPEKA, Kan., May 16, 2013 - The Westar Energy, Inc. (WR) Board of Directors today declared a quarterly dividend of 34 cents per share payable Jul. 1, 2013, on the company`s common stock. The dividends are payable to shareholders of record as of Jun. 7, 2013. -end clip-

Guesstimating here, $0.34 per quarter = $1.36 per year. WR stock is $32.07, so the annual return for only the dividends would be 4.2%. Of course, that will go up and down from year to year. Compare that with what you will get at a bank with a savings account or CD, which is less than 1%.

Over ten years, the dividends per share would be something like $13.60. I don't have any historical data to present, but it can be located with enough searching.

And, chances are overwhelming that you will realize a capital gain as well. I'm quite sure that's what you looked up.

I got my information about almost doubling your investment in only ten years from a few months ago. But, as always in the stock market, past performance is no guarantee of future performance.

Ron Holzwarth 4 years, 11 months ago

Correction: not "doubling your investment in only ten years", I meant quadrupling.

jafs 4 years, 11 months ago

To put this into context, consider that Madoff was offering a 12% annual return on what was supposed to be a safe investment.

And that a total stock market index fund has about a 5% return over the last five years.

Nobody would have quadrupled their money with a Westar investment made ten years ago - it would mean that they got a 300% return over ten years, thus a flat 30% each year on their initial investment.

My source for the return info is Morningstar, which is a very useful site for getting lots of information about stocks and funds.

Ron Holzwarth 4 years, 11 months ago

Math does not work like that. A 30% increase every year for ten years would be much more than 300%.

(1.3) to the 10th power = 13.7858, so a 30% gain every year for ten years would equal 1,378%, not 300%.

jafs 4 years, 11 months ago

If that's the way they're calculated the average annual return you'd be right.

But, it's not, as far as I know. You can do some calculations yourself to see. Take any investment, and look at the last five years (to make it easier), calculate the average return, and then check that against the actual investment gains.

For example, let's take the total stock market index fund from Vanguard (VTSAX):

5 year actual returns are: -36.99, 28.83, 17.26, 1.08, 16.38. If you average those out, you get 5.3

Now look at $10,000 invested: $6,301, $8,118, $9519, $9,621, $11,198. It turns out that you've only actually gained $1,198 over five years, which turns out to be only a 12% gain overall, meaning about 2.4%/yr as a flat percentage of the original.

Why is that? It's because all investments lose as well as gain, and when they do, the next increases are based on less than you originally invested.

Let's try another one, without any losses - gold (GTU):

26.05, 12.69, 22.44, 8.87, 6.1 - average 15.23

So, with $10K, you get:

12,605, 14,205, 17,392, 18,935, 20,090. This works out to more than that average, at about 20% a year flat on the original $10K.

So, sometimes the actual rate is less than the average, and sometimes more, apparently. But, I think that Morningstar takes the actual value of the investment, and calculates it that way, which is how I do it. So, they'd get about 20% a yr average rate on GTU, I think.

jafs 4 years, 11 months ago

I'm pretty sure that Morningstar takes the actual value of the investment, assuming reinvested dividends/capital gains, and calculates the actual value increase, then the average. So, if you invested $10K, they'd calculate the actual value of the investment 10 years later, then subtract $10K, divide by 10 and again by 10,000 to get that figure.

You'll see I said a flat rate of 30%/yr "on their initial investment", meaning 30% of $100K, or $30K/yr.

You're right that you don't have to make that much each year percentage wise - it's possible to exceed that percentage if your investment gains in value each year, since the returns are then on a larger amount than your initial investment. But, it's also possible to make less than the nominal percentage, if the value decreases.

The easiest way to do it is the way they do it, and it's the way I do it. Take an investment, calculate actual gains/losses over time, and then come up with a flat annual percentage on the initial amount. That makes it equivalent to a bank CD at a fixed rate.

jafs 4 years, 11 months ago

No, that's not what I meant.

Take the actual value of the investment over time, then calculate the actual gains, and average it out as a percentage of the original investment. I'm pretty sure that's how Morningstar does it.

If you've gained $300K on an initial $100K over ten years, that's a 300% gain, which averages out to a 30%/yr on the original $100K.

You're right, of course, that actual percentage returns don't have to be that high, if you gain each year, but it's also possible to lose value in the market, and then the actual gain is lower than the nominal rate of return.

Ron Holzwarth 4 years, 11 months ago

WR historical dividends, total $10.64 from July 10, 2003 until July 10, 2013.

One share on July 10, 2003 = $16.81

One share = $32.27 today

So, an investment of $16.81 made ten years ago would result in a gain of ($32.27 - $16.81) + $10.64 = $25.46. But you would still have your original investment, so the net worth would be $42.27.

So, my memory must be faulty. But still, turning $16.81 into $42.27 in only ten years is a pretty good investment. Much better than you will get at any bank, that's for sure. I don't think Westar really needs this rate increase.

jafs 4 years, 11 months ago

Not as far as I know - the returns are calculated assuming that all dividends and capital gains are reinvested - at least I think that's the way they do it.

And, that would be the way to maximize your returns, rather than just taking the dividends and capital gains out of the investment.

30% a year is an absurdly large return for any investment, and kind of nuts for a regulated utility. Regulated utilities have traditionally made lower returns than riskier investments.

jack22 4 years, 11 months ago

It sounds like they're following the same plan that our city commission has established as of late. That is, they'll lower the rates/taxes charged to developers and other business interests, while they raise the taxes/fees on individual homeowners and renters to make up the difference.

chzypoof1 4 years, 11 months ago

JUST WAIT....this is only the beginning. When the EPA/POTUS roll out their new Regs over will skyrocket. I found an old bill from 5 years ago for $120. Same house, now, $200. Sure, go ahead and raise it some more...thanks!

Currahee 4 years, 11 months ago

They're paying more than their fair share? Hey, with all those water subsidies maybe they should pay more for something for a change.

What's that smell? Just another .. SUB-SI-DY!

stuart 4 years, 11 months ago

I would imagine there are many more residential customers than big business and nickel and diming residential customers, while giving relief to BIG BUSINESS will make more money for WESTAR in the long run and make WESTAR look like they are helping someone in the process. That someone would be themselves.

jack22 4 years, 11 months ago

Yeah, workers of the world unite, you have nothing to loose but your chains. But then someone asks, what about our computers, our cell phones, our big screen TV's, and high fi stereos, do we have to give up all of that stuff, too? Well, in that case, I think we're calling the revolution off for now.

James Nelson 4 years, 11 months ago

This sounds very much like the governor's office gave the idea to Westar. It fits perfectly with Sam's belief that precious business must be given every advantage under the sun. As far as consumers getting the shaft, they don't count to the governor or Koch. So be it. I predict Sam will have the class warfare he has always wanted. I pray that when he leaves there is enough left in Kansas to start the rebuilding process without sucking the last breath out of those still here.

Bill Griffith 4 years, 11 months ago

Westar executives are smart enough to read the tea leaves and besides they would not have an outright conversation on this in case they are on the witness stand under oath at the docket proceeding. It is class warfare make no mistake.

bad_dog 4 years, 11 months ago

'Cause no one ever lies under oath or claims Executive privilege...

Patricia Davis 4 years, 11 months ago

We need to do more than pray and hope. If we want Kansas back, we will have to fight for it.

Ron Holzwarth 4 years, 11 months ago

I tend to think that isn't going to be a major factor. Compared to housing costs, electric bills are quite small.

arylwren 4 years, 11 months ago

I would support this only if we were all allowed to sit for a few hours in the lobby of a big business and enjoy the A/C while we charged our devices and used their wi-fi...

In_God_we_trust 4 years, 11 months ago

Support financial research efforts into free energy and create a new industry. It would still cost to lease or buy a device in the future, but the energy used would be free. It would provide a real alternative to the electric companies.

In_God_we_trust 4 years, 11 months ago

Free energy is real but needs further development. A solar panel is a form of free energy, that derives it's energy from sunlight. Nobody calls that magic. Free energy is not energy from nothing. It is energy from a source that you don't have to pay back or pay for. A lack of knowledge in the subject matter would lead one to believe that free energy is magic. It is more technical and therefore difficult to produce, but not impossible, and definitely not magic.

jafs 4 years, 11 months ago

Solar energy isn't "free" - it takes energy to produce solar panels and other parts of solar energy systems.

In_God_we_trust 4 years, 11 months ago

Yes, you are right. But, the source of energy that is converted into electricity is sun light. The device that performs the conversion is the panel. There is no debate that the panel has costs/energy involved in order to manufacture it. So far, there is no charge for sun light, which is the continual energy source for the device, when the sun shines. That is why I said it is a form of free energy.

And you are right that other parts of a solar system are costly, (batteries that need replaced at great cost or grid tie inverters) and the installation of the system adds up quickly.

Ron Holzwarth 4 years, 11 months ago

Crude oil, natural gas, and coal are all free, too. All you have to do is dig them up.

jafs 4 years, 11 months ago

Well, generally you have to own the land first, or pay to get that permission.

So, IGWT is right that the sun is cheaper, since nobody owns or rents it (yet?)

Ron Holzwarth 4 years, 11 months ago

Be quiet! Or Congress will pass a solar tax.

Ron Holzwarth 4 years, 11 months ago

It's still necessary to own or rent the real estate in order to utilize solar power.

bad_dog 4 years, 11 months ago

It's a little hard to understand why Westar needs 18 rate increases in a 4-1/2 year period. Makes one wonder whether the utility is being run efficiently or it is merely greed driven; fueled and enabled by an unduly cooperative KCC..

Ron Holzwarth 4 years, 11 months ago


There, I spelled it out for you. Do you need further clarification?

bad_dog 4 years, 11 months ago

G-R-E-E-D meets O-P-P-O-R-T-U-N-I-T-Y. I too can spell in a hyphenated fashion!

I've worked on both sides of two regulated industries. From a regulatory perspective, mere desire to increase P-R-O-F-I-T margins does not equate "need" sufficient to justify rate increases. If a regulated entity actually "needs" 18 rate increases in 4-1/2 years, IMHO they either aren't being well managed or there are some highly unusual external variables in play. Westar needs a cooperative regulator to obtain rate increases regardless what drives their recurrent rate increase requests.

Lisa Medsker 4 years, 11 months ago

"...highly unusual external variables in play." Oh, you mean like Koch? Or political interests? Say it ain't so!

bad_dog 4 years, 11 months ago

...Casually covers smirk with hand...

Tony Kisner 4 years, 11 months ago

Fair? Funny word. Without the base load need from large commercial demand they would not need so many coal plants that need upgrades.

Matt Schwartz 4 years, 11 months ago

Will Westar then change the type of lights/bulbs used in city street lamps to make them more effecient?

Carol Bowen 4 years, 11 months ago

Westar's presentation can be found at

If I read the presentations correctly, Westar did not really have a recognized rate structure. Nowhere, did I find the current rates, There were two structures considered - Peak and Average Usage and Class Cost of Service. The consultants recommended the Class Cost of Service.

Did anyone else notice the $33.9 million for environmental upgrades?

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