Usually when Kansans hear about Westar Energy and the Kansas Corporation Commission, it has to do with a request for a rate increase.
Now, however, the KCC has filed a complaint against Westar, the state’s largest electric utility, that ought to delight ratepayers but could displease Westar’s shareholders. If the KCC prevails, the upshot could be an annual rate cut of more than $15 million. Moreover, the KCC says in a press release, based on “anticipated utility growth,” this figure could roughly double over the next five years.
The KCC’s complaint, filed with the Federal Energy Regulatory Commission, alleges that Westar is charging “unjust and unreasonable” transmission rates. More specifically, it challenges the fairness of the Return on Equity component of Westar’s Transmission Rate Formula. The KCC contends that Westar’s 11.3-percent return on equity is excessive and results in “unjust and unreasonable” rates for Kansas customers. The KCC further contends that according to its analysis, Westar’s return on equity should be 9.37 percent.
That seems like a reasonable return on equity, but Westar wants — and says it needs — the higher level. In a press release, Westar President and CEO Mark Ruelle said, “To ensure our Kansas infrastructure continues to serve our communities and keeps our state competitive, we need to remain on a level playing field with our neighbors.” The statement further said that although Westar’s transmission service is a small part of the total utility costs, “it is a cornerstone on which our state’s reliability, access to low-cost power and renewable energy rest.”
Added Mr. Ruelle: “We appreciate the role the KCC has in balancing the public interest, but in this matter, we just have to agree to disagree.”
We, too, appreciate the role the KCC plays, and we take some comfort that the agency is challenging Westar. It’s worth noting that before the agency filed its complaint with federal regulators, the KCC asked Westar to scale back the return on equity on its transmission formula.
We don’t doubt that the KCC is aware of the importance of Westar’s transmission service to its overall service. Yet we trust that the commission, which has seemed on occasion to give utility companies the benefit of the doubt on rate matters, is appropriately putting ratepayers first in this dispute.