Westar Seeks Rate Increase That Would Boost Electric Prices 15 Percent
By Steve Everly, The Kansas City Star, Mo.
May 29–Westar Energy Inc. wants to collect an additional $178 million in annual revenue, which would boost electric rates by about 15 percent.
The Topeka company, which has 673,000 electric customers in Kansas, on Wednesday filed the proposed increase with state regulators, saying the increase was largely needed to pay for new gas-fired power plants, wind-energy projects and to recover the expense caused by December’s ice storm.
The company said it also intended to issue 6 million shares of stock to pay down short-term debt associated with the infrastructure projects. It said it expected its underwriters to receive an option to acquire an additional 900,000 shares. Westar shares closed Wednesday at $23.50, up 14 cents.
The rate increase, if granted by the Kansas Corporation Commission, would add $10.34 to the monthly bill of customers in Westar’s southern region, which includes Wichita, and $9.62 for its northern region, which includes some customers in Johnson and Leavenworth counties.
The company said the requested increase would have been higher if it had proceeded with building a coal-fired plant. Westar announced in late 2006 that soaring costs for building a coal-fired plant had caused it to at least delay building such a facility.
“Although it is necessary for prices to rise, we are pleased that this requested increase is far lower than it would have been had we embarked on building a new coal plant,” Bill Moore, Westar’s chief executive officer, said in a statement.
The company said its rates would still be lower than the national average and the utility has no guarantee that its rate increase, which probably would go into effect early next year if granted, will be approved.
The commission can approve the rate increase as requested, reduce, or reject it.
But even with the scrutiny, rates are all but certain to go up as the utility seeks to recover the expense of new power plants and other costs. David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board, said he expects this will be the first of other rate requests that will be filed by Westar in future years.
“These are not going to be cheap,” he said.
In addition, the requested increase filed Wednesday understates how much electric prices could go up for Westar customers. The company now has separate charges on bills for transmission, environmental, and fuel costs, which also are recovered from its customers. The company recently said, for example, that it was raising by more than $20 million per year the charge for environmental upgrades to existing power plants.
“What you are seeing are tens of millions of dollars of costs that are going on consumer bills that are not in this rate case,” he said.
To reach Steve Everly, call 816-234-4455 or send e-mail to severly@kcstar.com.
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