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| 2008 Rate Case |
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News Release (5/28/2008)
KCC Ruling (1/21/2009)
Comprehensive Energy Plan
Rate Case Settlement Questions and Answers
Q1. Who reached the settlement?
A1. Westar Energy, CURB, KIC, USD 259 and Wal-Mart Stores, KEC, Co-ops (Kaw Valley, Doniphan, and Nemanha-Marhsall), Kroger Co., U.S. Dept. of Defense, Midwest Energy and the KCC staff.
Q2. How was it reached?
A2. Through long discussions and thorough review of testimony filed supporting the company’s request for increased rates. The increase is based on significant investments the company has made over the last few years, since its last rate case in 2005, mainly to improve the company’s generating capacity.
For example, Emporia Energy Center is a new natural gas-fired peaking plant and will eventually provide more than 600 MW of electricity. Westar Energy is also investing in three wind farms to add to its generation mix.
Those three plants will provide an additional 295 MW of electricity. Two years ago, the company bought the Spring Creek natural gas-fired peaking plant, also a 300 MW plant, in Logan County, Oklahoma.
Q3. How will the increase go into effect?
A3. The rate increase will be implemented in late January, 2009, so customers will start seeing the change on their bills on or after February 1, 2009. Now that the order has been approved, the KCC staff will approve and stamp the tariffs. The rates will be pro-rated, so beginning in February, and depending on what cycle you are on, you will start seeing a portion of the increase. 100% impact won't be until March.
Q4. How much will residential bills go up?
A4. In Westar Energy’s north region, a residential customer using 900 kWh would see an increase of $7.57 per month. In Westar Energy’s south region, a residential customer using 900 kWh would see an increase of $9.44 per month. Residential customer usage varies widely, so the amount of increase will vary from customer to customer.
Q5. How do Westar Energy's rates compare to other electric companies?
A5. The average national residential rate is 11.12 cents per kWh. Westar Energy's new average residential rate will be 8.32 cents per kWh. Based on these numbers and usage of 900 kWh per month, the average national monthly bill is $100.08. That compare to a monthly Westar bill of 74.88 with the rate increase. (8.47 cents in the southern region and 8.19 cents in the northern region)
Q6. Why is Westar making so many investments?
A6. Customer demand continues to go up, aging utility equipment needs updating, and new environmental rules impose costs to comply. Energy experts expect we’ll see average annual energy growth (sales) of 1.6-1.7% with demand (peak - most we have to produce at one time) growth of .6% annually.
Westar Energy must invest to provide reliable electric service, meet growing demand and protect the environment.
Q7. When did my rates last go up?
A7. Customers in Westar Energy’s south region last had a base rate increase in 1989. As a result of the 2005 rate case, customers in Westar Energy’s south region saw their rates reduced by $21.2 million. Customers in the north region saw an increase - about $24.2 million. The difference in bills amounted to $3 to $4 per month.
Q8. If rates haven't been increasing much why is my bill higher?
A8. Most households are using more electricity today than ever before because of the many electronic devices and gadgets we didn’t have in the past. Energy experts expect we’ll see average annual energy growth (sales) of 1.6-1.7% with demand (peak - most we have to produce at one time) growth of .6% annually.
Relative Costs since 1991 graph
Q9. In 2005, the KCC allowed Westar Energy to separate certain charges from the base rate and list them individually on the bill. Will those continue?
A9. Yes. The 2005 rate case allowed for certain costs to be collected through itemized charges: fuel charge, transmission charge and environmental cost recovery rider.
The generating fuel costs and taxes are passed through to customers at the same cost that Westar pays. The transmission and environmental investments are recovered sooner to the time Westar incurs the costs, which save customers money in the long run. Those charges will continue.
Passing along fuel charges as they are incurred sends a “price signal” to customers that encourages them to conserve at the right times, rather than getting “sticker shock” years later when these costs would have shown up in base rates. The benefit of lower fuel costs and margins from off-system sales also pass through to customers.
Q10. Are the costs from the 2007 ice storm included in the settlement?
A10. Yes. The rates that resulted from the settlement are supported in part by the recovery of costs related to restoration of service after the December 2007 ice storm that knocked out power to about 204,000 customers throughout our service territory.
Q11. Doesn't the government pay for this through disaster aid?
A11. No. Government aid is available only to government entities and non-profit groups, such as cities and organizations like the American Red Cross. Aid is not available to for-profit companies like Westar.
Q12. Don't you have a storm fund or insurance to pay for this?
A12. Westar Energy had a reserve at the time of the ice storm to help pay for service restoration should a typical Kansas storm knock out power. Unfortunately, because of the magnitude of the destruction, the cost to restore power was much higher than our reserve fund.
We applied approximately $3.4 million of the reserve to the cost of the storm but maintained an amount for future storms. Westar Energy insures its large assets such as generating facilities against "acts of God." However, insurance premiums for storm coverage would cost as much or more than the actual restoration costs, so it’s not cost-effective for us or our customers.
Q13. Will this rate increase pay for past abuses or business losses?
A13. No. We have excluded all those expenses from the costs we ask to be included in the rates you pay. We are an open book, and the KCC and intervenors were also able to carefully audit our books.
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