Editorial: KCC, consumers

The Kansas Corporation Commission is taking an unusual but positive step on behalf of Kansas consumers.

It’s nice to see the Kansas Corporation Commission standing up for consumers.

In a federal complaint filed last week, the KCC is arguing that Westar Energy’s electrical rates are supporting an unreasonably high profit for the company’s stockholders. It reportedly is the first time in recent memory — or perhaps ever — that the state commission has challenged transmission rates granted by the Federal Energy Regulatory Commission. The KCC sets rates that Westar can charge for power, but FERC approves transmission rates because Westar is part of an interstate power pool.

The federal agency is allowing Westar to pass through to consumers a transmission cost that includes an estimated 11.3 percent “return on equity,” for its stockholders. A KCC analysis indicates the rate should be 9.37 percent. The reduction being sought by KCC would save Kansas consumers about $15.8 million a year.

Westar officials, of course, say the profit is necessary to make sure they can attract investors to support the company’s infrastructure. That essentially is the same argument Black Hills Energy is making to the KCC in its request for a rate increase that would raise the average residential customer’s bill by $4.17 per month. As part of that request, Black Hills was figuring in a 10.6 percent return for its investors. That figure drew protests at a public hearing last month, and the KCC will accept additional comments on the proposal through Sept. 22.

It’s easy to see why allowing utility rates to be set at a level that guarantees a profit of 10 percent, 11 percent or more to investors doesn’t sit well with the Kansas public. It’s important for utility companies in Kansas to be financially stable, which means they need to make a reasonable profit. However, it’s also imperative that state regulators serve the public interest by making sure companies aren’t reaping unreasonable profits at the expense of Kansas consumers.