State To Review KGE, KPL Rates
By Dennis Pearce
The Wichita Eagle
The state’s two largest electric utilities, KGE and KPL, agreed Tuesday
to request a rate review that could
change the price Wichita customers and others pay for electricity.
Topeka-based Western Resources, parent company of the two utilities,
isn’t saying just yet what rate changes it
might seek from the Kansas Corporation Commission, the state agency that regulates utilities.
But several parties expected to be involved in the review, including
Wichita Mayor Bob Knight, said it could lead
to lower electric rates.
"We think that upon presentation of the evidence, the KCC will find
the need for a significant rate reduction,"
said Jim Zakoura, a Kansas City lawyer who represents Kansas Industrial Consumers, a group of large
businesses, such as Boeing and Farmland Industries, that have a rate complaint pending at the KCC.
Final action by the KCC on new electric rates could be nearly a year away.
It has been more than five years since the commission considered a Western
Resources rate case, said KCC
spokeswoman Rosemary Foreman.
The rate review was part of an agreement announced Tuesday between Western
Resources and the staff of the
Western Resources and the KCC staff said they had agreed to ask the
three-member KCC board to allow
Western Resources to file a rate review request for its utilities by Nov. 25. The board will likely authorize the
review suggested by its professional staff.
The agreement provides a way to perform a comprehensive rate review
and establish appropriate retail electric
rates for Western’s KGE subsidiary in southeast and south-central Kansas, and its KPL subsidiary in northeast
and north-central Kansas.
The agreement sought to resolve the complaint filed by Kansas Industrial Consumers about KPL and KGE rates.
The KCC said rates will stay at the present level until a new rate structure is agreed upon.
KGE and KPL provide electricity to 628,000 customers in Kansas, including
Wichita. In May, Western
Resources put the two companies up for sale, but so far there have been no takers.
Should they be sold during the proposed review, the new owner would be obligated to follow the KCC rulings.
Knight has been leading a fight to get Wichita’s electric rates lowered.
KGE customers pay about 25 percent
more for power than KPL customers, although both utilities are operating divisions of Western Resources.
"Our people also have been of the opinion that (Western Resources) has
been over-earning for some time,"
Knight said. "That underlines my continued frustration with the KCC. There ought to be a rate hearing."
Depending on what the KCC allows to come before it, a rate hearing could
include Wichita’s argument that rates
be equalized among all Western Resources customers.
Wichita has a rate case pending before the Federal Energy Regulatory
Commission on the rate issue. Tuesday’s
action has no impact on that case, and "I would be surprised if we would drop the action before FERC," Knight
said. "We would need to know a lot more."
A spokesman for the Citizens’ Utility Ratepayers Board, the state agency
that represents small consumers in
utility issues, also said it was time for a review of Western Resources’ electricity rates.
"We’re in favor of Western Resources having a rate review," said CURB’s
chief economist, David Springe.
"We think they are making an excess of what is allowed."
Carl Koupal, executive vice president of Western Resources, said it
is too early to tell whether the company will
ask for a rate increase or a rate decrease.
"We do intend to seek recovery of our investment in new plants," he said.
Western Resources has spent $230 million for three natural-gas-fired
turbine generators it has built in Wichita
and for its 40 percent share of a new gas-fired plant it is building with Empire District Electric in Joplin, Mo.
The company will track costs from Oct. 1, 1999, through Sept. 30 of
this year, which is known as the test year. It
will build its case on the numbers accumulated during the test year.
The agreement between Western Resources and KCC staff asks for dismissal
of the complaint pending before
the KCC filed by Kansas Industrial Consumers asking for an investigation into rates charged by KPL and KGE.
Zakoura, the Kansas Industrial Consumers lawyer, was skeptical that
Tuesday’s action would resolve his client’s
"We believe that our position was made clear when we filed the complaint
back in March," he said. Kansas
Industrial Consumers will file comments, he said, and "emphasize the need for a rate review that must not be
delayed or sidetracked because Western Resources is in the process of selling its electrical business."
Tuesday’s agreement "was an important deal," said Foreman, the KCC spokeswoman.
"The staff and the
company feel it is an appropriate time to go forward in an cooperative manner."
All parties affected, including Wichita, CURB and Kansas Industrial
Consumers, have 10 days to file comments.
Spokespeople at all three organizations said they would file.
If the KCC decides that there should be a rate review and Western Resources
files a rate request, the KCC has
240 days (into July 2001) to render a decision, Foreman said.