KCC: Westar Rates "Unjust And Unreasonable"

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TOPEKA, Kan. (WIBW) -- The Kansas Corporation Commission (KCC) says the state's largest electric utility is charging too much. The agency contends Westar Energy could reduce rates by nearly $16 million a year -- a number it expects to double over the next five years.

"Unjust and Unreasonable"

In a complaint filed with the Federal Energy Regulatory Commission (FERC) on Wednesday, the KCC called Westar's Transmission Rates "unjust and unreasonable."

It claims the utility's Return on Equity (ROE) for its Transmission Formula Rate (TFR) is too high. According to the KCC, Westar's generating a 11.3% ROE, which it called "unreasonably high."

In fact, that's nearly two percentage points, than the agency 9.37% ROE, the KCC's own analysis indicated it should be.

For it's part, Westar notes that transmission service makes up a small portion of the cost of electricity. As for the ROE, Westar President and CEO, Mark Ruelle contended:

About a decade ago at the direction of Congress, FERC put new rules in place to attract more investment in the nation’s high-voltage power grid because development had stagnated. Realizing that many needed projects exceeded $100 million and required specialized labor, they established guidelines that would attract investors to these high-risk projects. Kansas legislators also led the effort with legislation that paved the way for Kansas to effectively participate in updating our nation’s gird.

Voluntary Changes Rejected

Before filing its request with the federal authorities, the KCC said it approached Westar, asking it to reduce its ROE of its TFR. After those discussions failed, the agency filed immediately.

“We appreciate the role the KCC has in balancing the public interest, but in this matter we just have to agree to disagree. We trust the process FERC has to review such concerns,” added Ruelle.

According to numbers provided by the KCC, Westar Energy serves 700,000 customers and produces 7,200 MW of electricity via coal, uranium, natural gas, wind, and landfill gas.

The KCC regulates public utilities, focusing on rates and terms of service.