Regulators consider Westar rate settlement
TOPEKA (AP) — Attorneys for Westar Energy Inc. and its customers urged Kansas regulators Thursday to approve a proposal for allowing the utility to raise its service charge for residential electricity users by $3 a month, saying it's a reasonable way for the state's largest electric company to cover additional costs.
The Kansas Corporation Commission had a hearing Thursday on the proposal, which arose from a settlement involving Westar Energy and representatives of its customers, with no parties opposing it. The commission sets utility rates and has until early December under state law to issue a ruling.
The settlement would let Westar, which has about 700,000 customers in Kansas, boost its overall rates by $30.6 million annually, or less than 2 percent. The bulk of the new revenues would come from residential consumers through the monthly fee they pay in addition to per-kilowatt hour charges. That fee, now $9, would rise to $12.
The parties to the settlement included the Citizens' Utility Ratepayers Board, a state agency representing small businesses and residential customers in cases before the commission. David Springe, CURB's consumer counsel, said the $3-per-month increase in the service charge is "manageable" for residential customers, partly because it's capped.
"We think that that's a good result in this particular case," Springe told the commissioners. "People are working together and compromising, and it does become sort of a community working together."
Westar proposed a slightly overall increase in April to pay for federally required environmental upgrades at its La Cygne power plant in eastern Kansas. During Thursday's hearing, Greg Greenwood, Westar's senior vice president for strategy, testified that the company actually needed $42 million more in revenues to cover those cuts but found efficiencies elsewhere to offset them.
"In our business, probably 85 percent of utility costs are fixed," Greenwood said. "We have to have our power plants, power lines, poles and call centers there, 24-7, even if that last generating unit's only needed five days on the hottest days of the summer. That infrastructure has to be there, or else people's lights go off on those hottest days."
However, Westar had wanted to shift about $50 million in charges to residential customers and small businesses from larger businesses and public schools. Under the settlement, it would drop that idea.
The settlement also would continue to allow Westar to earn a 10 percent profit, something CURB had questioned.
While residential consumers and small businesses will provide the bulk of Westar's new revenues, other, larger businesses will see increases as a group.
The exception will be the Occidental Chemical plant in south Wichita, which will see its rates reduced by $9.7 million. Occidental, Westar's largest customer, has a special contract with the company approved earlier by state regulators.