A $90.8 million rate increase for Westar Energy’s retail customers will be considered early next year by the Kansas Corporation Commission. However, public hearings on the proposal will begin later this month, according to an announcement from the KCC on Thursday.
The rate increase would affect approximately 687,000 customers, primarily in the eastern half of Kansas, including Emporia.
KCC has eight months to audit and consider the request. Westar anticipates that if the increase is approved, a price adjustment would occur around May of next year. The company estimates the average increase will be about $6.50 per residential customer.
The KCC regulates public utilities, including home telephones, natural gas, electric and water companies, in addition to motor carriers, oil and gas pipeline and oil and gas producers.
“In order to ensure that customers of regulated utilities are provided sufficient and efficient service at just and reasonable rates, utilities may not change their rates without Commission approval,” a KCC Regulatory Responsibility statement explained.
The KCC had approved a rate consolidation plan for Westar customers in October 2009. The change, which resulted in an increase for some customers, ended a rate disparity that had existed for about 18 years, since Kansas Power and Light and Kansas Gas and Electric merged in 1991.
In 2009, according to the KCC, the average Westar North residential customer was paying $77.28 per month while the average Westar South residential customer paid $77.31.
Service costs rising
Westar spokeswoman Gina Penzig said the increase under consideration now is tied to the basic costs involved in providing service.
“Labor costs — the employees who get out there and keep the lights on — materials, cost of maintenance ... those things have gone up over time,” Penzig said. “We are allowed to cover our costs, and in order to stay in business, that’s necessary.”
Westar investors also are allowed return on their investments as part of the cost of service. Capital-investment funds gained through stockholder investments help build new power plants, keep existing ones up-to-date and reliable, and compliant with environmental laws, she said.
“Part of that deal is that they expect to earn a fair return on that investment,” Penzig said.
A relatively new program, RehabiliTree, also is included in the rate request.
“Trees are the leading cause of power outages,” Penzig said. “We would like to take a more proactive approach and work through neighborhoods more systematically, and then go back to those neighborhoods on a more-regular rotation, and instead of chasing problems we’re preventing them.”
Penzig said that having reliable electrical service is essential, and maintaining and updating plants and equipment is part of that effort.
“As the state’s economy is becoming stronger and we’re trying to attract more businesses to the state, reliability is such a key piece of that,” Penzig said. “If (businesses and industries) lose power, they may lose hundreds of thousands of dollars, so it’s very important that we’re able to reinvest in our system and keep our service reliable and our communities viable.”
She expects the commission to issue its decision by late April. If all or part of the increase is approved, she estimated rate calculations from Westar should be implemented in May.
Consumer watchdog
The proposed increase is under study now by the Citizens’ Utility Ratepayer Board (CURB), whose stated mission is “to protect the interests of residential and small commercial utility ratepayers in the state of Kansas.”
CURB staff attorney Niki Christopher said Tuesday afternoon that the Westar application, about 10 inches tall, was on her desk for study; she estimated the application at between 1,500 to 1,600 pages.
“A full rate case requires a lot of documentation,” Christopher said.
After study, CURB will decide its position on the application.
“We generally look over the case and I can’t think of a case we’ve ever been involved in where we didn’t recommend some sort of decrease to their request,” she said.
Christopher provided CURB rate records that showed, for example, that Westar had requested a $177 million rate increase; the KCC granted a $130 million increase. (See accompanying graphic.)
Through the years, Christopher said, the ways in which utilities are reimbursed for their services have changed. Companies now are able to apply to institute surcharges to help pay for costs such as those incurred for environmental mandates, energy efficiencies and other specific types of expenses that can fluctuate.
Utilities may file with the KCC to impose surcharges for those costs without undergoing the full hearing process required for rate increases. The result may be a higher utility bill for consumers, although a formal rate increase has not been granted.
“It used to be that you ... paid a flat service charge of $10 a month, or whatever,” Christopher said. “Then you would pay a rate for however many hours of electricity you used. Over the years, it evolved that some of those elements that went into that rate were separated out into separate surcharges.”
Utilities had argued for those surcharges, citing that their risk was too high. The fuel charge, or energy charge adjustment, was developed during a time of volatility in the costs of fuels like coal or natural gas, she said. Surcharges give the ability to adjust prices up or down, depending upon the cost.
“CURB has always opposed (surcharges),” she said, explaining that utilities need to find efficiencies rather than passing on increased costs.
“We feel that when these surcharges were brought in, the incentive for the company to find efficiencies were reduced. And we have lost that battle time and time and time again,” Christopher said. “We all want (electric service) to be reliable, we all want this to be efficient, we all want them to be growing and meeting our needs as our needs grow. But we have fought this battle against line-item surcharges since the beginning.”
Public hearings
The first public hearings for the rate increase request will begin at 6 p.m. on Tuesday, Nov. 29, at three locations: at the KCC office, 1500 SW Arrowhead Rd., in Topeka; the K-State Salina College Center, 2310 Centennial Rd., College Center Conference Room, in Salina; and Pittsburg State University, 201 E. Cleveland, Hughes Hall, Room 315, in Pittsburg.
The second hearing, at 6 p.m. on Wednesday, Nov. 30, will be at Wichita State University’s Eugene M. Hughes Metro Complex, 5015 E. 29th St., North, Room 180, Entrance “N,” in Wichita.
Each meeting will be divided into two parts.
The first will be an informational section during which Westar will explain its request and will answer questions. Commission staff, the Citizens’ Utility Ratepayer Board (CURB) and others also will be available to answer questions.
“The second part is a formal public hearing to ensure that members of the public have the opportunity to make their views of the application known to the commissioners,” a KCC notification stated.
People who need special accommodations under the Americans with Disabilities Act need to provide at least 10 days’ advance notice to the commission by calling (785) 271-3140.
The KCC’s evidentiary hearings on the request will begin at 9 a.m. on Feb. 13 in the KCC office in Topeka.
The commission will accept public comments from Westar customers through Feb. 8. Comments should contain reference to Docket No. 12-WSEE-112-RTS and may be sent to: Kansas Corporation Commission, Office of Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027. Comments also may be submitted by e-mail to public.affairs@kcc.ks.gov.
Steve_Corbin (anonymous) says...
Bobbie,
Would that $6.50 increase be per month or yearly?
Of course if you add our current sales tax, it would be a $7.04 increase, or just about 10% for the average customer?
November 17, 2011 at 7:12 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
Steve C.,
That $6.50 + state and local tax will be per month . And let us not forget, that " SURGHARGES ", may also be raised, " Utilities may file with the KCC to impose surcharges for those costs without undergoing the full hearing process required for rate increases. "
I fully anticipate that the " Average " Westar customer to eventually see a much higher bill that the $ 6.50 + that Westar is quoting, even if the KCC denies the " Rate " increase ! Westar will eventually get what they want, " more MONEY ", via " Surcharge " increases without the full KCC hearing process !
Take a look at your Westar, Kansas Gas, Cable One or any utility service bill and see if " Surcharges " make up a substantial part of your utility bill !
A " Surcharge " is just a fancy, legal way of saying, " Overcharge " for services . If you don' t think that " surcharge " is just a nice way of saying " Overcharge " , then take a look at the definition of " Surcharge " !
1sur·charge verb \ˈsər-ˌchärj\
Definition of SURCHARGE
transitive verb
1a : overcharge b : to charge an extra fee c : to show an omission in (an account) for which credit ought to have been given
2British : overstock
3: to fill or load to excess
4a : to mark a surcharge on (a stamp) b : overprint
See surcharge defined for kids »
Examples of SURCHARGE
Origin of SURCHARGE
Middle English, from Anglo-French surcharger, from sur- + charger to load, charge — more at charge
First Known Use: 15th century
Related to SURCHARGE
Synonyms: gouge, soak, sting, overcharge
source, http://www.merriam-webster.com/dictio...
Surcharge ! Why don' t all governments, utility companies, everyone who adds a " Surcharge " cost/tax to a customer/consumer' s bill call it what it actually is, " Overcharge, Gouging, Defrauding or down right " Thievery or Robbery or excessive Greed ?
JMO
November 17, 2011 at 9:12 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
Sorry, I omitted the following in my previous post.
Examples of SURCHARGE
November 17, 2011 at 9:17 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
OOPS, that didn' t work, I' ll try again..
Examples of SURCHARGE
November 17, 2011 at 9:20 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
Examples of Surcharge
November 17, 2011 at 9:25 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
Just go to the Surcharge definition site !
November 17, 2011 at 9:26 a.m. ( permalink | suggest removal )
Malique (anonymous) says...
This one?
http://www.merriam-webster.com/dictio...
November 17, 2011 at 10:05 a.m. ( permalink | suggest removal )
methusla (anonymous) says...
Yeah, thats the one Malique !
November 17, 2011 at 10:50 a.m. ( permalink | suggest removal )
Glitterbird (anonymous) says...
I think the first example says it all
surcharge = overcharge
November 17, 2011 at 1:54 p.m. ( permalink | suggest removal )