June 4, 2008
CURB reaches settlement with KEPCO
CURB has reached a settlement in principle with KEPCO and the Commission Staff that will be filed with the Commission next month. The settlement will reduce the $5.4 million increase requested by KEPCO to roughly $5.15 million. KEPCO is a wholesale coop that is owned by, and supplies power to 19 electric coops throughout Kansas.
CURB had two primary objectives in deciding to settle. The Commission's historical reluctance to deny cooperatives any proposed rate increase, because their customers are the owners of the coops, was a big factor. The risk of litigating the case and having KEPCO walk away with everything they asked for was high. Additionally, KEPCO filed a fairly "clean" case, without a lot of excess. Our main differences centered around how much cash KEPCO needs on hand to maintain financial ratios that its creditors recommend, and whether the salary of a former executive should be removed from rates, since his position has not been filled.
Although we had differences with KEPCO's position, and believed that our original position would have been better for KEPCO's customers, our assessment of the chances of prevailing at hearing led us to enter into settlement negotiations. We managed to secure a $250,000 reduction in the increase. Additionally, KEPCO will use a refund recently received from Westar for overpayment on certain power contracts to maintain financial ratios, rather than request a surcharge to achieve the ratios through the end of 2008. Except for a few necessary provisions, the settlement is basically a "black box" settlement. A hearing on the settlement will be held on June 23.KCC Docket No. 08-KEPE-597-RTS