Westar Energy seeks $10M reimbursement for program designed to reduce energy usage

08/03/2013 2:45 PM

08/06/2014 8:37 AM

While seeking nearly $32 million in higher rates, Westar Energy also is asking to collect an additional $10.4 million next year to pay for the past year’s programs to try to get Kansas residents – and one big business – to use less energy.

The additional charge, called the Energy Efficiency Rider, is expected to add about 48 cents to the average homeowner’s monthly bill for the next year.

About $6.3 million of the money will go to pay for Westar’s “WattSaver” program, which provides free thermostats to residential customers. The thermostats are hooked into Westar’s power-management system and can be used to cycle the homeowner’s air-conditioner compressor on and off to help hold down peak loads on hot summer days.

About another $4 million of the efficiency rider goes to Westar’s largest retail electricity customer: the Occidental Chemical Corp. plant on South Ridge Road in west Wichita.

Westar pays the chemical company a bill credit of $300,000 to $370,000 a month in exchange for the right to interrupt its power on short notice during peak usage periods.

Westar filed its efficiency request as the Kansas Corporation Commission continues to consider a larger proposal by the company to increase its ongoing rates by $31.7 million, primarily to pay for environmental upgrades at the La Cygne power plant south of Kansas City.

The company also has asked permission to “rebalance” its rates so that residential and small-business customers pay $50 million more a year and major industrial and commercial customers pay $60 million less.

If the commission grants Westar’s request, Occidental – which has its own special contract with Westar – would split about $10 million of rate relief with another special-contract customer, Frontier El Dorado Refining LLC, according to KCC records.

Combined, the rate increase and the energy efficiency charge would add about $8 to the average residential power bill.

So far, the only non-Westar party to intervene in the efficiency rider case is the Citizens’ Utility Ratepayer Board, a small state agency that represents residential and small-business customers on utility issues.

David Springe, chief consumer council for CURB, said it’s highly likely that Westar will get what it’s asking for in energy efficiency because it already spent the money.

However, he said he does intend to ask some pointed questions about whether Westar’s payments to Occidental are bringing enough value to the company’s nearly 700,000 customers.

“There’s value in having a customer that big who can curtail (their power usage) in 10 minutes,” Springe said. “The question is, we’re paying them millions of dollars a year. Are we getting the value? Is this more of an abstract value or has it been used to attain some level of value? How do you assess whether the program makes sense?”

Springe said CURB tried to raise those questions two years ago, but “our concerns were fairly summarily dismissed” by the commission.

Mike Heim, coordinator of regulatory affairs at Westar, said the company has not actually had to curtail Occidental’s usage and that doing so would be a last resort.

But the 100 megawatts that Westar could interrupt is the equivalent of “a small power plant, basically,” Heim said.

While Westar would fire up all its generators before curtailing Occidental, the ability to cut that power on short notice means Westar doesn’t have to build another power plant to cover that much usage, he said.

If the commission approves Westar’s overall rate filing, Occidental’s credits will be built into its rates in the future, Heim said.

Customers also will probably see a dip next year in the cost of the WattSaver program, which now has about 50,000 customers enrolled, said Westar spokesman Nick Bundy.

Although the program is still available, Westar’s not promoting it and is considering ending it, he said.

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