Westar, KCP&L to seek rate increases in 2015

? Westar Energy and Kansas City Power & Light both plan to seek rate increases early next year, in part to finish recovering the $1.2 billion both companies have spent on environmental upgrades at their jointly-owned LaCygne power plant in Linn County.

The companies have been allowed to recover about half of those costs through earlier rate cases. But it’s possible they will try to recover the final half — about $300 million each — as quickly as possible because of new clean air rules pending at the U.S. Environmental Protection Agency that could force aging coal-fired power plants like the one at LaCygne to be retired soon.

“We’re looking for second half of our investment,” Westar spokeswoman Gina Penzig said. “There are other items we’ll also ask them to look at. We’re looking for a full review of the rates.”

Niki Christopher, spokeswoman for the Citizens Utility Ratepayer Board, which represents consumers in cases before the KCC, said utilities are generally allowed to recover costs of such projects over the expected life of the plant. But in some circumstances, they’re allowed to recover costs over a shorter time. She said new regulations that could shorten the expected life of the plant may fall into that category.

In 2013, the KCC granted Westar a $30.7 million rate increase, part of which covered costs associated with the LaCygne plant.

Both companies said they will not release details of their rate requests until the official filings with the KCC. KCP&L plans to file its rate case on Friday. Westar said it plans to file its rate request in March.

Those cases will be the first major utility cases to be heard by a KCC consisting solely of Gov. Sam Brownback’s appointees. The two newest members, former Republican sens. Pat Apple of Louisburg and Jay Emler of Lindsborg, replaced commissioners who had been appointed by Democratic governors.

Emler’s term expires March 15, around the same time Westar is expected to file its rate case, and it is not known whether Brownback will reappoint him to another term or replace him with a different appointment.

Westar serves about 700,000 customers in eastern Kansas, including Lawrence, Topeka, Pittsburg and Wichita. It is made up of the former Kansas Power & Light and Kansas Gas & Electric service territories.

The LaCygne plant consists two generating units, the first of which was built in 1973. The second unit was added in 1977.

The plant was originally designed to burn coal from the nearby Pittsburg & Midway Coal Mine. But the utilities were forced to stop burning that coal in the 1980s because of its high sulfur content, which contributed to acid rain.

The plant now burns what is called PRB coal, a lower-sulfur coal that comes from the Powder River Basin in Wyoming and Montana.

In the years since then, the EPA has adopted more rules to reduce fine particle emissions that have been linked to respiratory diseases.

But a new set of rules under consideration aimed at reducing greenhouse gas emissions from power plants could threaten the long-term viability of the LaCygne plant, as well as other aging coal-fired power plants around the nation.

The EPA’s proposed Clean Power Program, which could be finalized as early as this summer, would require each state to adopt plans to cut greenhouse gas emissions from power plants 30 percent by 2030. One of the goals is to replace as much fossil fuel generating capacity as possible with power from renewable sources such as wind and solar power.

Penzig said it isn’t known how those rules would affect LaCygne or other coal-fired plants in Kansas until the rules take effect and the state develops its compliance plan.

Some utility officials have objected to that timetable, saying it does not give them enough time to recover the cost of previous environmental upgrades, like the ones at LaCygne, that were made to comply with earlier clean air requirements. They also say it doesn’t allow enough time to develop new generating capacity to replace aging coal-fired facilities.

The KCC filed comments in October with the EPA, formally objecting to the Clean Power Plan.