New KPL Rate Parity Would Be Shocking
By Jon A. Brake
It is shocking to think-about. The City of Wichita wants lower electrical
rates and they are willing to say or do anything
to get them.
And what will the City of Manhattan do? Nothing! Oh! They will hold
a meeting Thursday, August 24 to gain
information but that is nothing.
The City of Topeka and Mayor Joan Wagnon has been asking communities
in Northeast Kansas to help fight a 30%
rate parity increase. In other words, they may need to take KPL, KG&E, Western Resources and the City of Wichita to
court. That would cost money.
The City of Manhattan is willing to watch from the sideline and jump-in
at a later date. Manhattan might save a few
dollars. This is a town willing to spend $900,000 to store dogs and cats. This is a town willing into spend $500,000 on a
broken-down railroad depot. This is a town willing to spend more than a million dollars for a walking trail.
If Wichita wins this fight, every household in Manhattan will pay 30%
more for electricity. It may cost the City of
Manhattan several hundred thousands of dollars to join this fight but it will cost citizens millions a year if they don’t.
And the citizens will be paying year after year after year. It will never stop.
Here are some of the facts given to the City of Manhattan by Mayor Wagnon:
1. KPL customers have historically enjoyed low electric rate, largely
due to a very efficient and cost effective power
plant, Jeffrey Energy Center.
2. KG&E customers (Wichita area) have paid higher rates than us
due to the higher generating costs of electricity from
Wolf Creek Nuclear Power Plant. This has bother people in Wichita, but they are still below the national average in
3. In 1991 KG&E merged with KPL, forming Western Resources. The
merger savings prevented a huge rate increase
for Wichita’s KG&E customers and the KPL customers were guaranteed by the Kansas Corporation Commission (KCC)
that the two companies could have separate rate structures so Topeka customers wouldn’t have to pay for Wolf
Creek’s higher costs. Without the merger, KG&E rates would have increased by $45 million. Needless to say, Wichita
didn’t mention rate parity at those hearings.
4. However, by 1995, rates were reviewed by the KCC and the City of
Wichita asked for KG&E rates to be equalized
with KPL customers (rate parity). The KCC allocated a greater share to KG&E than KPL, effective early in 1997, but
didn’t order rate parity.
5. In the almost 10 years since the merger creating Western Resources
total savings have gone more to KG&E
customers ($88 million) than KPL customers ($29 million). You can argue that those savings should have been shared
equally, but they weren't. Western Resources continued to operate KG&E and KPL as two separate companies, with
two separate rate structures.
In a February 23, 1999 letter to Shareholders, David C. Wittig, Chairman of the Board, Western Resources said:
1. "Customers of both KGE and KCPL (who together own 94% of Wolf Creek)
and the Kansas Electric Power
Cooperative (the 6% owner), are still paying for its construction under the plan approved by the KCC. In fact, a key
point of the KPL/ KGE merger was that KPL customers would not pay for Wolf Creek. Therefore, we set the utilities up
separately with separate rate bases because it was both the right thing to do and a plan the public supported."
2. "Now, some people are seeking to change that understanding by claming
that KPL customers use Wolf Creek
power. That claim is not true. This power was built for and serves KGE, KCPL and KEPCo. There are no power lines
leaving Wolf Creek that go to the KPL service territory."
The City of Manhattan must get into this fight now, do not wait until
Topeka and Wichita are in court and at the mercy
of a judge.