December 2, 2009
Empire seeks 40% increase in base rates
On November 4, 2009, Empire District Electric Company filed a request with the Kansas Corporation Commission for a $5,203,483 increase in the rates of its Kansas electric customers. While the company characterizes this as an increase of about 25% in the total residential bill, the increase to base rates, exclusive of surcharges and fuel costs, is almost 40%.
Empire is a publicly-regulated electric, gas and water utility with about 215,000 customers that operates in southwest Missouri, northeast Oklahoma, northwest Arkansas and southeast Kansas. In Kansas, there are approximately 8660 residential electric customers (down 1.7% since the company's last rate case), and 1235 commercial electric customers (down 3.1%). However, Kansas residential and commercial customers are currently providing Empire 34% more in total revenues annually than they were providing in 2004.
Empire says the increase is justified because of its recent investments in new generation and pollution control equipment, and costs incurred repairing damages from two major ice storms. The company plans to come in again for another increase after KCPL's Iatan II plant in Weston, Missouri, is operational. Empire owns 12% (100MW) of this plant's projected output. The current projected date for Iatan II to begin operating is late summer in 2010.
Why does a utility that “offers one of the highest yields of any electric utility equity,” (according to Value Line) need such a big increase in rates? CURB has engaged the services of a consultant to analyze the company's application for the answer.
A scheduling conference will be held on December 15. The KCC has until July 2, 2010 to make a decision on the proposed increase.