Read more: http://blogs.kansas.com/gov/2011/11/30/hostile-crowd-greets-westar-at-rate-hearing/#ixzz1fX92vnnt

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A top executive with Westar Energy on Tuesday night laid out the utility’s case during a public hearing for a nearly $91 million overall rate hike, which includes employee benefits, a tree-trimming program and system upgrades.

The opposing counsel representing residents and small businesses countered by saying rates undoubtedly will rise, but the extent of the increase Westar is asking for can be dialed back.

Westar’s requested rate bump is 5.85 percent, which would add about $6.44 per month to the average 900 kilowatt-hour residential electric bill.

David Springe, consumer counsel for the Citizens Utility Ratepayer Board, said Westar’s rates have been upped annually in recent years by a few line item charges, in addition to overall rate case increases.

“Consumers probably don’t realize,” he said, they have shouldered “a more than 50 percent” hike on average bills in the past decade.

Rates have jumped by $123 million since 2008, Springe said, with line item charges that aren’t scrutinized as closely as an overall rate hike.

That is in addition to the rate cases that have brought about $147 million in increases.

Greg Greenwood, Westar’s senior vice president of strategy, said affordable rates are important, but a high level of service is “critical” to providing the quality of living customers demand.

“We don’t expect anyone to be thrilled with it,” he said of the proposal.

Greenwood highlighted the need to be competitive in retaining skilled employees who “go out in the dark of night in the worst of weather.”

Federal mandates need to be met for employee pension funds, environmental compliance, transmission grid upgrades and energy efficiency, he said.

Greenwood also pointed out Westar’s relative increase in its cost of essentials has doubled since 1991.

The Kansas Corporation Commission, which presided over the hearing, will have the final say in the matter.

The hike would give shareholders a 10.6 percent return on their investments, up from the current 10.4 percent.

Springe said he understands some issues the KCC doesn’t have much discretion over because of regulations. However, raising shareholder profits isn’t one, he said.

“If I can convince commissioners to lower it 1 percent, that’s $29 million in rates (saved),” he said.

Springe said he “always finds areas” where proposals can be cut, so he doesn’t expect Westar to get all it wants.

Westar officials said the rates, if OK’d, will be 15 percent below the national average instead of the current 20 percent.

More than 30 people were at KCC offices, 1500 S.W. Arrowhead Road, with about a dozen of them indicating they were ratepayers and not employees of Westar.

A handful of people watched via video conference from Salina and Pittsburg.

The public voiced queries about executive salaries and wage bumps, along with the cost-effectiveness of services.

In Pittsburg, Jeremy Wade during sworn testimony said he was opposed to the proposal “mainly” because of the 10.6 percent shareholder profits.

“I believe it’s unfair” when compared to 30-year U.S. government bond returns at 3 percent, he said.

According to Westar:

■ $37 million would go to employee benefits and pension funding, which would meet federal funding limits.

■ $20 million would be funneled into its tree-trimming program.

■ $20 million would go into operations costs.

■ $12 million would go to the Wolf Creek nuclear power plant, which needs updates following an extension of its operating life by 20 years.

A second public hearing is scheduled for 6 p.m. Wednesday in Wichita.

Corey Jones can be reached
at (785) 295-5612
or corey.jones@cjonline.com.

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To reach Karen Dillon, call 816-234-4430 or send email to kdillon@kcstar.com.

Read more: http://www.kansascity.com/2011/10/30/3239187/diversion-of-weatherization-funds.html#ixzz1cNYJYwpi

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Since its last official rate review in 2008, Westar Energy has raised its electric rates four times. Those four increases have already cost Kansas customers more than the $91 million the company requested to add to rates last week.

“You’re paying $110 million more than (after) the last rate case, and this is $91 million on top of that,” said David Springe, chief consumer counsel for the Citizens’ Utility Ratepayer Board, the state agency that represents residential and small-business utility consumers.

In years past, Westar would seek a rate increase about every four or five years and rates would stay stable from year to year in between reviews.

But in recent years the company argued — and the Legislature agreed — that today’s more volatile energy markets require faster response to changing conditions.

The result is that bills creep up year after year without the full-scale review that the utility’s requests used to go through.

A constant irritant

The constantly rising rates are an irritant to customers like Don Hedrick, 75, of Severy, in southern Greenwood County.

“Over here in eastern Kansas, they put $10 on last year and now they want another (increase),” Hedrick said.

Hedrick, who lives on $1,100 a month in Social Security payments, said some of his neighbors are getting by on as little as $400 a month.

“My Social Security, I haven’t gotten a raise ever since when,” he said. “But every year, every year, they (Westar) want more money.”

And, he said he doesn’t think the Kansas Corporation Commission, which regulates rates for the state, is doing a particularly good job of it.

“I’ve called them,” he said. “They’ll thank you, and that’s it. I wish they would come down and realize how bad things are for people in the small towns.”

Rate increase through riders

At its last full rate case three years ago, Westar requested $177 million in increased rates and got $130 million, Springe said.

But since then, the Legislature has allowed Westar to seek rate increases through a variety of “riders” including funds for environmental improvements to its power plants and new transmission lines.

Since 2008, regulators have granted Westar permission to increase rates $57.1 million through the environmental rider and $55.2 million on its transmission rider, according to numbers provided by Westar.

In an abbreviated rate review last year, Westar was given permission to add $17.1 million to rates to pay for expansion of wind power — projects pushed by former Govs. Kathleen Sebelius and Mark Parkinson.

Westar was also granted a $5.8 million rate increase under a rider to spur energy efficiency, another priority of the Sebelius and Parkinson administrations.

Overall, the increases approved since the last rate case total $135.2 million, $4 million more than Westar got in its last rate case.

Customer involvement

Springe said the only way customers like Hedrick are going to be able to affect their rates is if they become involved in the process.

While some of the increases are unavoidable — such as the need to bring Westar’s aging coal plants up to current emission standards — a lot of the costs are arguable, Springe said.

He said if people want to affect their rates, they have to organize and participate in the public hearing process that’s part of ratemaking.

In recent years, the hearings have generally been sparsely attended, with ordinary residents often outnumbered by company officials.

“If 10 people show up and say ‘I don’t like this,’ it doesn’t (affect the outcome),” Springe said. “There’s 600,000 residential customers. If a whole lot of people got together and started making noise and writing their legislators, because legislators then call the KCC, that does have an impact.”

Increases inevitable

The current proposed Westar increase will add $6.44 to the electric bill of an average customer using 900 kilowatt hours of electricity a month.

At The Eagle’s request, Westar also provided numbers showing how the change would affect smaller and larger users.

A small house or condo using 750 kilowatt hours a month would see a monthly increase of $5.54, while a large house using 1,250 kilowatt hours would pay $8.56 more, according to Westar’s figures.

Out of the company’s $91 million rate increase, the biggest cost driver — at $37.5 million — is the rising costs of employee benefits, especially pensions and depreciation related to pensions, said spokeswoman Gina Penzig.

No. 2 on the list is $22 million in reduced sales.

A planned expansion of tree trimming to prevent power outages is the third-largest cost driver. Westar has been running a pilot program in Wichita that it now proposes to expand throughout its system.

And at $12 million, the fourth-biggest impact on rates is increased maintenance and turbine replacement costs at the Wolf Creek nuclear plant at Burlington, Penzig said.

While costs are rising, Westar has some decreases that kept the costs from going higher than they are, she said.

The company has saved $30 million against planned depreciation of its power plants, she said.

“We’re taking good care of our plants and getting more use out of them” than was originally projected, she said.

And Penzig said Westar is continuing to reap cost reductions — about $17 million this year — from the 1992 merger of the Kansas Gas & Electric and Kansas Power & Light systems that created the company now known as Westar.

In addition, the company is saving $8.8 million a year through changes in the way it finances employee life insurance, she said.

Lower sales a factor

Westar’s lower-than-expected power sales last year — which is raising rates by $22 million — is not closely related to efforts by the state and the company to get individual consumers to conserve power, Penzig said.

She said residential usage has remained fairly stable, and the dropoff has been with commercial and industrial companies.

Battered by the recession, many of those companies have either cut their production or closed down, which means they buy much less power from Westar, Penzig said.

Springe said he also advocates for conservation. As an economist, he said, he recognizes that electricity sales do affect Westar’s ability to cover its fixed operating costs and get a reasonable profit.

But while declining sales can cause higher rates in the short term, using less is a good long-term strategy, he said.

In pure economic terms, “If everybody cut their usage in half, then they (Westar) are going to collect half as much money, so they would have to come in and double the rates to get back to where they are,” he said.

But while that’s the textbook answer, the real problem in Kansas is that the company has to invest a lot in updating power plants and expanding capacity to meet forecast future demands, he said.

“Really, what you’re doing when you’re trying to conserve now, is trying to avoid building future stuff,” Spring said. “You’re still going to have to build some, but the question is, if we conserved a whole lot, could we knock a chunk off of that and save us all some money?”

Read more: http://www.kansas.com/2011/08/28/1991845/planned-westar-rate-hike-would.html#ixzz1WNaA0di2

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An energy case before the Kansas Corporation Commission could set a precedent for how utility companies handle expensive environmental upgrades to their coal plants.

Last week, Kansas City Power & Light argued before the KCC that it should be allowed to collect $1.23 billion from its customers to cover government-mandated environmental upgrades to the La Cygne Generation Station.

Westar Energy has 50 percent ownership in the power plant, but KCP&L manages it.

Among those objecting to the proposal are The Great Plains Alliance for Clean Energy and the Kansas Chapter of the Sierra Club. Both believe the energy companies should have spent more time considering alternatives to the retrofits, such as spending the $1.23 billion on building a larger inventory of renewable and cleaner energy sources and retiring the nearly 40-year-old coal plant.

“Is this a prudent decision to retrofit an aging, vintage coal plant that is almost certainly going to need additional retrofits just so a utility can keep burning coal?” GPACE executive director Scott Allegrucci asked.

The choice is one that utility companies across Kansas will continue to weigh as they face mounting environmental regulations for cleaning up their coal plants, said Stephanie Cole, a spokeswoman for the Kansas chapter of the Sierra Club.

“KCP&L is at a crossroads, and the status quo is no longer an option. So, they have a choice. Do they want to spend a billion dollars to upgrade an aging coal plant or do the want to pursue alternatives?” Cole said. “Many other utilities are faced with the same decision. And now what we are seeing is that they are choosing to phase out the oldest and least efficient coal plants.”

Among the coal-fired plants scheduled for multimillion dollar environmental upgrades is the Westar-owned plant in Lawrence.

According Westar Energy spokeswoman Gina Penzig “time and time again” it has made economic sense to keep operating the Lawrence power plant.

“For long-term energy policy and for maintaining good affordable prices for Kansas, it’s really important we keep the coal fleet,” Penzig said.

In the case of the La Cygne plants, KCP&L considered a host of alternative energy sources, said the company’s director of corporate communications, Katie McDonald. Because of its intermittent nature, wind couldn’t provide the base-load of energy that the coal can at La Cygne. And, natural gas or nuclear plants were either more expensive than the retrofits or couldn’t be built in time to meet the 2015 deadline.

“Our customers biggest priority is keeping costs down,” McDonald said. “The least cost option is to retrofit La Cygne.” Using its own model, the KCC staff came to a similar conclusion.

But Allegrucci questions the models used, saying some of the data was outdated and didn’t factor in other environmental regulations that could be passed in the coming decades.

“We don’t believe the options were presented fairly or accurately,” he said.

If the KCC approves KCP&L’s request, the average monthly bill of a Westar residential customer would gradually increase over a 20-year period from 36 cents a month to $3.95 in 2017 and 2018 and then gradually decreasing to about $1.50 a month.

If KCP&L would pay for the retrofits without having to raise customers rates, it wouldn’t need approval from the KCC to move forward with the upgrades. The company’s filing is asking that the customers be charged for the retrofits before the project is completed, not afterward.

And, that’s one part of the KCP&L’s request that concerns David Springe, who is the consumer counsel with the Citizens’ Utility Ratepayer Board.

“It’s moved all the risk over to ratepayers. So we think the shareholders should get a lower profit on that piece of the plant,” he said.

As for Allegrucci, he believes the issue should open up a statewide conversation on the sources of energy being used.

“We need to have an adult, policy discussion on energy and what is in the best interest all around — for the state, for ratepayers and in terms of public health and in terms of job creation,” he said.

The KCC has until Aug. 22 to make a decision.

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With only 14 cents a month at stake, Kansas customers of Kansas City Power & Light Co. probably won’t notice the effect of the current battle over their electricity rates.

The fight, however, promises to spread to other utilities in the state and across the state line into Missourians’ utility bills of all kinds.

At issue is how much the customers of a utility should pay for the outside lawyers and experts the company hires to help win approval of a rate increase.

“I don’t care how much utilities spend on their case. I care how much consumers have to pay for that,” said David Springe, consumer counsel for the Citizens’ Utility Rate Board.

CURB, as it’s called, is the official consumer advocate when the Kansas Corporation Commission decides whether utilities in the state deserve a rate increase. And it has made the cost of arguing rate increases an issue in KCP&L’s current case before the commission.

Missouri regulators have ordered their own investigation into the costs of rate cases, an inquiry that isn’t tied to KCP&L or any other utility’s rates in the state.

“We have seen rate case expenses go through the roof,” said Kevin Gunn, chairman of the Missouri Public Service Commission.

Gunn said that raises the question whether the old regulatory compact of folding these costs into customers’ rates should still hold or whether company shareholders should foot part of the bill.

Lewis Mills, who advocates for consumers in Missouri, said he’s looking for some sort of “inherent check on a utility’s natural inclination to spend as much money as possible to prosecute a rate case.”

Using experts

Normally, customers of utilities pay the costs when regulators, consumer advocates and companies hold hearings to determine where utility rates should be set. These expenses are folded into the price of electricity or natural gas as part of the cost of a reliable and regulated supply, just as power plants, payrolls and other more obvious expenses are included.

Some of these rate-case costs include outside experts and lawyers the company hires for the rate case.

It’s these added outside costs that have become the focus of a new review in Kansas of KCP&L’s spending when it won a rate increase last December. The $21.5 million the rate increase will generate each year will help recover the cost of building the Iatan 2 power plant, which Missouri customers also are helping to pay for.

In approving the rate increase in Kansas, regulators allowed $4.5 million of KCP&L’s outside costs, and customers are paying them. Commissioners are now reconsidering that amount in part because it wasn’t fully debated during the rate case.

KCP&L says it actually spent $7.7 million on outside help and is asking the commission to approve the higher amount. If it succeeds, the average residential bill would increase by 14 cents a month.

Conversely, CURB wants the allowable tab for outside help held to less than $700,000. If it wins, residential bills could be cut by about 14 cents a month. It also has proposed alternative amounts up to $3.5 million.

The consumer advocates in Kansas and Missouri both argue that there will be no limit on these outside costs if utilities know they can always pass them along to customers.

KCP&L acknowledged that it was a costly battle to win the recent rate increase. The tab was driven up by the complexity of the case, the number of parties that intervened and the inability of all sides to reach a settlement.

“This was one of the largest and most complex cases in the company’s history,” spokesman Chuck Caisley said.

In contrast, KCP&L’s previous rate case cost only $2.3 million, and that covered the company’s outside help and the expenses of the corporation commission and its staff as well as CURB. The commission and CURB costs in the recent case add $1.4 million on top of the $7.7 million KCP&L spent.

Cost disagreement

Both sides agree the recent Kansas rate case was more costly in part because the commission weighed the additional and complex issue of whether KCP&L spent prudently when it built Iatan 2. The commission ruled that it had and awarded the rate increase.

But the commission didn’t allow all of the outside help expenses that KCP&L asked to be covered.

It disallowed several million in costs that it found to be too high, duplicative, in error, unreasonable or the responsibility of company shareholders rather than ratepayers.

CURB has argued that many of the outside costs should be excluded as excessive.

CURB’s filings in the case show several attorneys billed KCP&L at hourly rates that exceeded $500, $600, $700 and even $800. And CURB claims the company called on the services of 40 attorneys from six law firms and 45 consultants from eight consulting firms for a combined 25,000 billable hours.

“KCP&L spent a lot of money fighting this case,” said CURB’s Springe. “They hired the best.”

Allowing a company to spend that kind of money to win a rate case and requiring ratepayers to pick up the tab amounts to a blank check for the companies, Springe said.

One of the alternatives CURB recommends is splitting the company’s outside costs evenly between ratepayers and the company, and capping the allowed total at no more than twice what the commission and CURB spend.

AARP Kansas has taken up the cause, rallying its members to tell the Kansas Corporation Commission “to stop giving a blank check” to KCP&L.

Ernest Kutzley, advocacy director for AARP in Kansas, said the added 14 cents came on top of the rate increase and that many seniors already devoted a sizeable portion of their income to utility bills.

“The costs just continue to pile up,” Kutzley said.

Scrutiny welcomed

KCP&L spokesman Caisley denied that the company used the large number of lawyers and consultants that CURB claims. But he agreed that KCP&L relied on the best experts and lawyers.

Caisley said the case would have been far less costly had all the parties been able to agree on a new rate level rather than going through the full litigation process at the corporation commission.

KCP&L said it also welcomed Missouri’s inquiry if it could make the process of rate setting less costly.

Unlike their Kansas counterparts, Missouri regulators approved nearly all the outside costs KCP&L incurred in its recent case there, which led to a $59.4 million rate increase.

“It’s a value judgment and you have to look at what customers get” for the price of the outside help, Caisley said.

Caisley also said the decision by Kansas officials to disallow some of the company’s expenses proved KCP&L didn’t have a blank check with which to fight for rate increases. It has had to write off the amounts it spent that weren’t approved.

“Every dime we spend every single day, every year, is scrutinized time and time again by regulators,” Caisley said.

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Kansas utility regulators have approved the route of a $300 million high-voltage power line that is meant to boost the state’s wind-energy industry.

The Kansas Corporation Commission on Tuesday approved the 122-mile “V” route in southwest Kansas that will stretch from near Spearville to east of Medicine Lodge. The decision was the last regulatory hurdle and clears the way for buying land along the route.

Construction is planned to begin in 2013 with the line going into service in 2014.

“The V-Plan will improve electric reliability and enable energy developers to tap into the transmission grid, further establishing a competitive energy market in the state,” Carl Huslig, an executive with ITC Great Plains, said in a statement. “This will contribute to a more robust transmission grid that will benefit Kansas and the entire region.”

ITC Great Plains is a subsidiary of ITC Holdings, a Michigan company that operates several high-voltage lines in the Midwest. The Kansas line is being built with local utility partners Sunflower Electric Power Corp. and Mid-Kansas Electric Co.

The regulatory decision follows the commission’s recent approval of a $200 million high-voltage line that will hook into the V line at Medicine Lodge and run to Oklahoma. That line will help export wind energy to other states and is being built by Prairie Wind Transmission, which has Westar Energy as a partner.

Kansas officials have pushed for the lines to be built to help revive the state’s wind energy industry, which has limited avenues to send power to other states.

The lines also have attracted critics, who raised concerns about their rising costs. The line to be built by Prairie Wind Transmission has seen its cost double, in part because of a change in the route to avoid the habitat of the little prairie chicken. Utility customers in several states including Kansas and Missouri will foot the bill.

The V route approved Tuesday by the KCC includes minor changes from the original route because of concerns of some landowners. The route travels through Ford, Clark, Kiowa and Barber counties.

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On January 21, 2011 the Kansas Corporation Commission (KCC) staff opened a general investigation docket that provides for an examination of the costs and benefits related to achieving required public health and environmental improvements as they will impact ratepayers for the investor-owned utilities (IOUs) regulated by the KCC.  The basic question posed by the docket is whether it is better to allow Kansas IOUs to pass on to ratepayers the costs to retrofit aging coal plants in order to achieve public health and environmental benefits, or to consider that IOUs will not be allowed (full) rate recovery for coal plant retrofits and might consider alternatives to coal-fired generation capacity (i.e. natural gas, renewable energy sources, energy efficiency, etc.) in order to meet demand for electricity.

Subsequent to the general investigation docket, Kansas City Power & Light (KCPL) filed a docket seeking rate-recovery for retrofits to the LaCygne Generating Station, to cover the estimated costs for required retrofits of its coal-fired units.   Westar Energy is also a co-owner of the LaCygne Station and is involved in the docket.   A decision by the KCC to allow rate recovery under this docket is required by late August, and would mean that the costs to retrofit and continue production from the coal-fired unit(s) at LaCygne would be passed onto consumers/ratepayers.

As required by the KCC, public hearings will be held to allow input/discussion regarding the rate-recovery proposal for the LaCygne Station retrofits.

• The first meeting involves presentations by KCP&L and will be held on Thursday, May 5^th in Overland Park.
• The second meeting involves presentations by Westar and will be held on Tuesday, May 10^th in Topeka (with video conferencing access from Salina and Wichita).

Per our request, GPACE has been granted status as an intervener in both dockets. We’ve put together a Resource page on the KCC dockets and will update it as the proceedings move forward with relevant details and appropriate information (public meetings, opportunities for input and education, etc.).

We strongly encourage you to attend one or both of the public meetings on May 5^th or May 10^th.   These are official KCC public hearings where Westar and KCP&L will make presentations and where the public can ask questions and comment about the retrofits and the request to pass those costs onto customers.

Public comments on the rate-recovery docket will be accepted at the KCC through June 8, 2011.

Westar or KCP&L customers unable to attend the public hearings may submit comments to the KCC Commissioners through June 8, 2011.  Comments should reference Docket No. 11-KCPE-581-PRE and be emailed to public.affairs@kcc.ks.gov or made over the phone at 1-800-662-0027 or mailed to:

Kansas Corporation Commission

Office of Public Affairs and Consumer Protection

1500 SW Arrowhead Road

Topeka, KS 66604-4027

Your comments are very important!

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Background

On January 21, 2011 the Kansas Corporation Commission (KCC) staff opened a general investigation docket focused broadly on the impacts of current and pending public health protections related to air quality and emissions from coal-fired power plants. The docket provides for an examination of the costs and benefits related to achieving required public health and environmental improvements, especially as they will impact ratepayers for the investor-owned utilities (IOUs) regulated by the KCC. To some degree, the question posed by KCC staff in the docket – and to be examined in more detail by the KCC and affected parties – is whether it is better (in terms of public health, environment, rates, costs, etc.) to allow Kansas IOUs to pass on to ratepayers the costs to retrofit aging coal plants in order to achieve public health and environmental benefits, or to consider against the same factors the possibility that IOUs will not be allowed (full) rate recovery for coal plant retrofits and might consider alternatives to coal-fired generation capacity (i.e. natural gas, renewable energy sources, energy efficiency, etc.) in order to meet demand for electricity.

Kansas Corporation Commission Docket Number 11-GIME-492-GIE

In the Matter of a General Investigation Into KCP&L and Westar Generation Capabilities, Including as these Capabilities May Be Affected by Environmental Requirements.

See prior coverage of the initial docket filing here.

Subsequent to the general investigation docket filed by the KCC Staff, Kansas City Power & Light (KCPL) filed a docket seeking rate-recovery for retrofits to the LaCygne Station, to cover the estimated costs to achieve public health protections required of the coal-fired units at LaCygne. Westar Energy (Westar) is also a co-owner of the LaCygne Station and is also involved in the docket. One effect of the KCPL docket – if granted by the KCC Commissioners – will be to pre-empt any rate or regulatory decisions affecting the LaCygne Station that could ensue from KCC decisions as part of the general investigation docket.

Kansas Corporation Commission Docket Number 11-KCPE-581-PRE

In the Matter of the Petition of Kansas City Power & Light Company (“KCP&L”) for Determination of the Ratemaking Principles and Treatment that Will Apply to Recovery in Rates of the Cost to be Incurred by KCP&L for Certain Electric Generation Facilities Under K.S.A. 66-1239.

See the SourceWatch overview of the LaCygne Generating Station, including some general fuel source, emissions, and technical information about the facility.

Per our request, the KCC Hearings Officer has granted GPACE status as an intervener in both dockets, allowing GPACE to offer information and official testimony to the KCC regarding the dockets, to review information from other parties to the dockets, and requiring GPACE to abide by KCC rules and regulations related to the docket proceedings, including confidentiality of some information considered as part of the dockets.

As required by the KCC, public meetings were held to allow public input/discussion regarding the rate-recovery proposal for the LaCygne State retrofits.

▪ The first, on Thursday, May 5th, involved presentations by KCP&L and will be held in Overland Park.

▪ The second, on Tuesday, May 10th, involved presentations by Westar and will be held in Topeka.

Transcripts from the public hearings are available at the KCC website.

Evidentiary hearings will be held July 11-15, 2011, in the KCC’s first floor hearing room at 1500 S.W. Arrowhead Road, in Topeka, Kansas. The Commissioners must make a decision on or before August 22, 2011. A decision by the KCC to allow rate recovery under this docket is required by late August, and would mean that the costs to retrofit and continue production from the coal-fired unit(s) at LaCygne would be passed onto consumers/ratepayers.

KCPL customers, Westar customers, and members of the public were allowed to  submit comments to the Commissioners through June 8, 2011.

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KCP&L’s Proposal

KCP&L’s petition in this case includes a request for predetermination of ratemaking principles that will apply to the recovery of costs to be incurred during the environmental upgrade of its La Cygne power plant. The La Cygne Generating Station is comprised of two coal-fired units. Unit 1 has a net generating capacity of 736 MW, and Unit 2 has a net generating capacity of 682 MW. KCP&L owns 50% of La Cygne. Kansas Gas and Electric Company, a wholly owned subsidiary of Westar Energy, owns the other 50% of La Cygne. KCP&L is responsible for operating both units. KCP&L’s Application states significant investment in environmental equipment and a common chimney for both La Cygne units is needed in order to meet current and pending environmental rules and regulations. The estimated total cost of these investments is $1.23 billion for the total project excluding Allowance For Funds Used During Construction (AFUDC) and property taxes. Of this amount, $281 million affects KCP&L’s Kansas customers.

Under traditional ratemaking, KCP&L estimates that its Kansas annual revenue requirement will increase $58.2 million starting in 2016 and then decrease over time. Under this method, KCP&L estimates the average residential customer bill (assuming 12,000 kWh per year – 1,200 kWh per summer month and 800 kWh per winter month) will initially increase $8.27 per month beginning in 2016 and then decrease over 20 years to about $3.70/month. Alternatively, KCP&L requested an Environmental Cost Recovery rider for the La Cygne Environmental Project. If this alternative method is approved, KCP&L would instead be able to recover the cost incurred from the proposed plant upgrades through a line item on customer bills beginning in 2012 that will be updated annually. The expected impact to the average residential customer bill under this alternative would start at $0.60/month, gradually increasing to $7.77/month in 2016, and then decreasing to about $3.51/month over 20 years.
A complete copy of KCP&L’s petition and supporting testimony is available on the KCC’s website at:http://estar.kcc.ks.gov/estar/portal/kcc/page/docket-docs/PSC/DocketDetails.aspx?DocketId=29c43954-9a79-46ff-8211-9d45316e6b64.

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KCP&L’s Proposal and Effect on Westar Customers

Kansas Gas and Electric Company (KGE), a wholly owned subsidiary of Westar Energy, Inc. (Westar Energy) (hereinafter referred to collectively as “Westar”), has a 50% interest in the La Cygne Generating Station and will be responsible for 50% of the cost of these environmental upgrades. Westar has intervened in the docket at the Commission and filed testimony April 15, 2011 in support of KCP&L’s petition.

KCP&L’s petition in this case includes a request for predetermination of ratemaking principles that will apply to the recovery of its portion of the costs to be incurred for the environmental upgrade of its La Cygne power plant. The La Cygne Generating Station is comprised of two coal-fired units. Unit 1 has a net generating capacity of 736 MW and Unit 2 has a net generating capacity of 682 MW. KCP&L is responsible for operating both units. Westar, through KGE, owns 50% of La Cygne and will be responsible for 50% of the cost of the environmental upgrades proposed by KCP&L.

In its petition, KCP&L states that significant investment in environmental equipment and a common chimney for both La Cygne units is needed in order to meet current and pending environmental rules and regulations. Westar supports KCP&L’s decision to make this investment in environmental upgrades at La Cygne and supports KCP&L’s request for predetermination. The estimated total cost of these investments is $1.23 billion for the total project excluding Allowance For Funds Used During Construction (AFUDC) and property taxes. Westar will be responsible for $615 million of this amount. If KCP&L’s request for predetermination is approved, Westar will seek to recover its portion of the costs through its Environmental Cost Recovery Rider (ECRR).

If the Commission allows Westar to recover these costs through its ECRR, the change to Westar’s ECRR as a result of the proposed environmental upgrades at La Cygne is estimated by Westar to impact the average residential customer’s bill (use of 10,800 kWh per year) by approximately $0.36/month, gradually increasing to $3.95/month in 2017 and 2018, and then gradually decreasing to about $1.50/month over a 20-year period.

A complete copy of KCP&L’s petition and supporting testimony is available on the KCC’s website at:http://estar.kcc.ks.gov/estar/portal/kcc/page/docket-docs/PSC/DocketDetails.aspx?DocketId=29c43954-9a79-46ff-8211-9d45316e6b64.

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Links/resources (provided by GPACE) for more information related to rates, fuel sources, and impacts of coal-fired (and other sources of) electricity generation:

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Rates

http://www.gpace.org/news/kcpl-boosts-cost-for-new-electricity-plant-and-customer-rates-will-rise-too/

http://www.bizjournals.com/kansascity/stories/2009/06/08/daily21.html

http://blogs.pitch.com/plog/2009/06/kcpl_raising_utility_rates.php

http://economy.kansascity.com/?q=node/7452

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Health

http://www.lungusa.org/healthy-air/outdoor/resources/clean-air-survey.html

http://www.psr.org/resources/coals-assault-on-human-health.html

http://www.environmentamerica.org/reports/toxic-free-communities/stop-toxic-pollution/dirty-energys-assault-on-our-health-mercury

http://www.gpace.org/news/health-benefits-predicted-with-proposed-mercury-regulations-on-coal-plants/

http://www.catf.us/coal/problems/

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Environment

http://onlinelibrary.wiley.com/doi/10.1111/j.1749-6632.2010.05890.x/full

http://www.pewclimate.org/?utm_source=Pew+Center+on+Global+Climate+Change+newsletter+list&utm_campaign=9e30f90c8b-Pew_Center_February_2011_newsletter&utm_medium=email

http://gpace.org/wp-content/KSWater&Agriculture.pdf

http://www.gpace.org/wp-content/FeddemaSummary.pdf

http://www.nrdc.org/globalwarming/watersustainability/index.asp

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Economic Development

http://www.ucsusa.org/clean_energy/technology_and_impacts/impacts/burning-coal-burning-cash.html

http://www.epa.gov/air/sect812/

http://www.kcchamber.com/GO-GREEN.aspx

http://www.ucsusa.org/clean_energy/technology_and_impacts/impacts/financial-hazards-of-coal-plant-investments.html

http://www.bipartisanpolicy.org/news/press-releases/2011/03/new-task-force-report-sees-promise-more-stable-natural-gas-prices-combin

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Jobs

http://www.bluegreenalliance.org/press_room/private_publications?id=0050

http://www.bluegreenalliance.org/states/kansas

http://www.ceres.org/Page.aspx?pid=1334

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Plans for billions of dollars in environmental upgrades to some of the state’s larger power plants will get a closer look.

Staff with the Kansas Corporation Commission have filed a petition to start investigating whether it made more sense to close down large, aging power plants to build new ones or to spend billions retrofitting the plants to meet pending environmental regulations.

The KCC staff will also look at whether the energy provided by the plants in question is needed and, if the upgrades are made, whether the utility has picked the best option.

Eventually the cost of making those environmental upgrades will be shouldered by energy customers.

“We have a fiduciary responsibility to make sure the upgrades are handled in the most efficient and effective way,” KCC spokeswoman Cara Sloan-Ramos said.

The upgrades are associated with the Environmental Protection Agency’s regulations for controlling pollutants that cause haze. Several years ago, the Kansas Department of Health and Environment pinpointed five coal-fired power plants that needed to make environmental upgrades to reduce haze.

They included two units in La Cygne, of which Kansas City Power and Light and Westar Energy share ownership, a Westar unit in Colwich and two more in St. Marys.

Among the most notable retrofits will be the one at the La Cygne power plant, which has to be completed by June 2015. In all, the upgrades would cost $800 million to $1 billion, an amount that would be split in half by KCP&L and Westar.

Chuck Caisley, senior director of public affairs for KCP&L, said the company believes making the upgrades to the 30-year-old plant to keep it running for several more decades is a sound decision. But he said the KCC filing is still a good thing.

“We think a conversation about this is good and healthy. If folks have other ideas, absolutely we would be willing to talk about them,” Caisley said.

Gina Penzig, a spokeswoman for Westar, said the company is still reviewing the petition to see whether it would affect any of its plans.

“This is something that is fully within their jurisdiction,” she said of the KCC filing.

Both the Kansas Chapter of the Sierra Club and the Kansas Citizens’ Utility Ratepayer Board support the KCC’s role in studying what options would work best.

Bill Griffith, chairman of the energy committee for the Sierra Club, said it’s a conversation that needs to take place.

“Why throw $800 million or more to do a retrofit to have a coal plant around for another 30 to 40 years when we realize coal is a bad thing to have out there?” Griffith said.

The Sierra Club likes the possibility that a coal plant could be replaced with something that is environmentally friendlier, like wind or natural gas.

For David Springe, consumer counsel for the Kansas Citizens’ Utility Ratepayer Board, building new plants might make more sense even without the environmental consideration.

With energy usage down from the recent recession, Springe said, utility companies have some breathing room before building more power generation.

“It’s a pure economic question. Does it make more sense to spend billions on old, dirty plants or build better, new, more efficient plants that are cleaner and cheaper?” Springe asked.

KCC staff will be working quickly on the issue so a policy can be in place before utilities bring cases before the board, KCC spokeswoman Sloan-Ramos said.

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