September 9, 2005
CURB Says Westar Customers Deserve $48 Million Decrease in Rates
Today, the Citizens' Utility Ratepayer Board (CURB) recommended that the Kansas Corporation Commission decrease the electric rates for customers of Westar Energy by a total of $48 million. CURB represents residential and small commercial customers of the regulated utilities in proceedings at the KCC.
CURB recommended a $42.1 million decrease for Westar South, which is Westar's name for the former KGE service area. CURB also recommended a $5.9 million decrease for Westar North, which is comprised of the former KPL service area.
Westar has requested a $36.3 million increase for Westar South and a $47.8 million increase for Westar North.
David Springe, Consumer Counsel for CURB, said much of the disparity between CURB's recommendations and the company's request were founded in the agency's concerns with Westar's inflated claims concerning depreciation, the appropriate accounting treatment of the company's lease on the LaCygne power plant, and the amount of savings that should be credited to Westar's shareholders as a result of the merger of KPL with KGE.
CURB recommended decreases on most of 60-some claims that comprised the company's itemized application for a rate increase.
"Our consultants have spent months going over the company's application with a fine-tooth comb," said Springe. "They found numerous inflated claims and expenses that were double-counted. Our depreciation expert found significant flaws in Westar's depreciation testimony, and our financial expert believes that the company's requested rate of return is way out of proportion to returns for similar electric companies."
CURB also recommended that the Commission reject Westar's proposals to pass through directly to customers the costs of fuel and transmission. "More and more of the risks that used to be associated with investment in utilities, such as volatile fuel costs, are being shifted to customers," said Springe, "but the utilities don't want to accept a lower rate of return in exchange for the reduced risk to their investors. An energy cost adjustment shifts the risk for approximate 70% of a utility's operating expenses onto its customers. We don't believe this is a fair trade-off for ratepayers."
CURB's recommendations were made in testimony filed with the KCC on Friday. Westar's rebuttal testimony is due to be filed on October 3.