KCC staff, consumer advocates recommend millions in Westar rate cuts
photo by: Westar Energy
TOPEKA — Kansas utility regulators are being urged to reject Westar Energy’s request for a $17.2 million rate increase and instead order the company to cut rates for Kansas customers by $69 million to $125 million.
Those recommendations were made this week in testimony filed by the Kansas Corporation Commission’s own staff and the Citizens Utility Ratepayer Board, or CURB, a state agency that represents consumers in utility rate cases.
“CURB’s evidence strongly supports the need to decrease rates for all Westar customers and we hope the KCC will adopt our recommendations in this rate case,” CURB consumer counsel David Nickel said in a statement.
Westar is the largest electric utility in Kansas. It provides service to about 700,000 customers in the state, including customers in Lawrence.
In February, the company filed a rate request seeking changes in two phases, starting with a rate cut of roughly $1.6 million, to take effect in September, reflecting some of its expected savings from recent changes in federal tax law and anticipated savings from its proposed merger with Great Plains Energy, the parent company of Kansas City Power & Light.
Those savings would be partially offset by recovering over time the cost of developing the new $400 million Western Plains wind farm in southwest Kansas.
Initially, the company asked for that to be followed by a $54 million rate increase, to take effect in February 2019, reflecting the expiration of some renewable energy tax credits that have held down rates for the past 10 years, and the expiration of some of Westar’s wholesale contracts with Kansas electric cooperatives.
The combined effect would be an increase in Westar’s revenue of about $52.6 million a year.
Since February, however, the KCC has approved a merger between Westar and KCP&L. As a result, Westar’s request has been lowered to an overall $17.2 million rate hike, reflecting even more of the savings Westar expects to realize as a result of the merger.
According to Westar, that would translate to an increase of $2.80 a month for the average residential customer.
In addition, Westar proposed a new kind of rate structure that would be mandatory for people with solar panels and other kinds of self-generation systems, charging them additional monthly fees for the energy they take off Westar’s power grid during peak demand hours.
But in testimony filed with the KCC this week, both CURB and the KCC staff urged regulators to reject the idea that Westar needs any kind of overall rate increase and instead argued for substantial rate cuts.
Those two agencies submitted dozens of pages of testimony that discuss in great detail how they think Westar’s costs should be measured and how they should be allocated across different classes of customers.
The bottom line is that KCC staff is recommending a two-stage rate adjustment that would result in an overall $69 million rate cut, while CURB is proposing roughly a $125 million rate cut.
CURB has said its proposal would result in a savings of about $6 per month for average residential customers. The impact from KCC staff’s recommendation was not immediately available.
Both the KCC staff and CURB argue that Westar has overstated its future revenue requirements, arguing in large part that Westar should not be allowed to recover costs associated with the Western Plains wind farm.
“Westar acknowledges that this investment is not necessary to provide service to Westar’s customers,” he said. “Therefore, CURB believes it unfair to saddle the ratepayer with the risk of the investment, especially since KCC staff warned Westar not to make the investment in 2015.”
In addition, both KCC staff and CURB are recommending smaller fees than Westar is proposing for customers who use solar panels and other self-generation systems.
Westar is expected to submit its rebuttal testimony by July 2. All the parties in the case will then enter into settlement discussions, but if no settlement is reached, the KCC will begin conducting hearings July 23. A final decision from the KCC is expected by Sept. 27.