Westar justifies rate increase plan to fuel wind turbines
Topeka ? Lawyers for Westar Energy Inc. say the state’s largest utility is being “reasonable” in asking for higher electric rates for the construction of new wind turbines.
Westar is asking the Kansas Corporation Commission to give pre-approval to a rate increase to build 300 megawatts of wind power at a projected cost of $830 million during 20 years. The company estimates that it will raise the average customer’s bill by $2.25 a month in the project’s early years.
Lawyers argued Wednesday that utilities should get extra income for fulfilling a state policy encouraging renewable energy.
A law allows regulators to increase the profit potential for utilities that develop alternative energy and conservation programs. The KCC could allow a rate increase in the utility’s rate of return between 0.5 and 2 percentage points. Westar is seeking a 1 percentage point increase in profits from wind power.
David Springe, an attorney for the Citizens’ Utility Ratepayer Board, said the estimate could add $50 million to customer bills over time.
Lawyers for Westar and the Empire District Electric Co., which intervened in the case, argued that utilities should get extra income for fulfilling a state policy that encourages renewable energy.
“Our proposal is reasonable, appropriate and consistent with the law and policy of the state of Kansas,” said Westar lawyer Martin Bregman.
Springe and an attorney for large industrial customers say the legislative intent for the law was to encourage alternative energy at a time when development was riskier.
James Zakoura, attorney for Kansas Industrial Consumers, said Westar faces almost no risk because it is asking the commission to approve its costs and profit level before building anything. Springe said other regulated utilities have built or bought wind power without an additional profit subsidy.
The KCC staff proposes rewarding Westar if its wind production exceeds benchmarks and penalizing the utility if it falls short. Westar said that would place the company at the mercy of the weather.
CURB is proposing that Westar purchase the wind power from private developers. Springe said that would be cheaper, but Westar said it couldn’t make any money if it buys the power and sells it to consumers.
Westar proposes buying half the wind power it needs and generating the other with its own turbines.
The KCC has been asked to rule on the rate request by Dec. 27 to allow Westar time to close the deal on wind power before the first of the year.