The more we learn about Westar Energy’s proposed $31.7 million rate increase, the more we dislike it.
The proposal, announced in April, would raise electric rates on most residential customers by about $7.50 a month. Light electricity users’ rates would go up about $4 a month, according to the company.
If the money were needed to continue to provide electricity and ensure quick recovery after storms — something Westar deserves compliments for — the increase might be justified. But that’s not what Westar has in mind.
Rather, with this proposal, Westar also wants to “rebalance” its rates. Residential and even small business customers together would pay about $83.5 million more a year for electricity to offset a roughly $50 million decrease in electricity costs for Westar’s large commercial and industrial customers. The projected 6- to 9-percent residential rate increases would subsidize rate cuts of 9 to 15 percent for big customers.
Westar says its big customers pay more than the cost of energy while residential and small business customers pay less than the cost. Westar also contends that paying higher bills will pay off for residents with job creation and a stronger economy in Kansas.
Both assertions are debatable. David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board (CURB), makes a good case that Westar’s economic model is faulty. According to the Associated Press and the Wichita Eagle, Mr. Springe argued at a public hearing on the proposed increase that Westar’s model focuses on peak usage, which supports its effort to lower rates for large customers. A better model, he said, would evaluate costs in terms of overall usage, and according to that model, Westar’s large and smaller users are paying roughly what they ought to be paying.
Jeff Martin, Westar’s vice president of regulatory affairs, tried to sell the increase and Westar’s rates as a bargain. “Including the increase, it will still cost our residential customers less than $3.50 per day to power their home and everything in it.”
That might be, but it doesn’t justify the rate increase. And it would be more credible if Westar wasn’t asking residential and small business customers to pick up part of the tab for large customers’ electric usage.
Richard Ranzau, a Sedgwick County commissioner, put it well when he told Westar representatives, “That’s not economic development. It’s wealth distribution, and in this case, corporate welfare.”