When Wichita electric customers got their chance to tell state officials what they think of Westar Energy’s latest rate increase proposal, they didn’t like it very much.
Westar is asking the Kansas Corporation Commission to increase rates on residential customers by an average $7.50 a month while reducing rates for major industrial and commercial customers.
“I wonder what this means to the single mother that’s working part time at Wal-Mart making minimum wage; it’s only going to raise her rate $7.50 a month, that’s all,” said resident Paul Miller. “But … the big industrial customers, the ones who manufacture big airplanes, the ones who process petroleum and other things, the ones who run the casinos – all these important people – you’re going to give them hundreds and even thousands of dollars in decrease, paid by these people who are giving the $7.50 a month increase.
“That’s not the way democracy usually is intended to work; it’s just opposite that,” Miller said.
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Miller was one of about 120 people who attended the commission’s first public hearing on the Westar rate proposal Monday in Wichita. About 25 testified that the increase would harm them and their neighbors.
“I think Westar does a pretty good job when we have a storm, but that’s the last good thing I’ve got to say,” said customer Ulysses S. Beasley of Wichita. Speaking directly to a Westar representative at the hearing, he continued: “Wal-Mart and Boeing and all those people … they’re making money off your juice. The residents don’t make anything.
“So now why in the heck can you say it’s fair for residents to pay a higher rate than the business people?”
Several ministers with congregations in poorer areas testified that an increase in power rates causes poor people to lose service, leading to sickness and poor nutrition, because they can’t afford heating and cooling or store food properly.
“I protest increasing electrical rates on those who can barely get by and would find any increase too much,” said the Rev. John Martin of Grace United Methodist Church in Winfield, who had previously served at West Heights and College Hill United Methodist churches in Wichita. “This is a justice issue when we shift a part of the cost to those who have little or no way to increase their income.”
There was even a comparison to the famed musical play “Les Miserables,” about the grinding poverty and powerlessness of the common people in early 19th-century France.
“What are we supposed to do?” pleaded Diana Alexander of Wichita. “Sell our blood? Sell our teeth? Sell our hair? Sing ‘I Dreamed a Dream’? Because that’s what they’re asking for.”
The commission is considering a request by Westar for an overall $31.7 million increase in its electric rates.
Westar is also seeking to rebalance its overall rates to cut big business and industrial users’ rates by 9 to 15 percent while raising rates on residential and small-business customers by 6 to 9 percent.
In total, home and small-business users would see their bills rise a collective $83.5 million, while big business customers would pay about $50 million less for their power.
In a question-and-answer session immediately preceding the public hearing, Westar vice president of regulatory affairs Jeff Martin sought to convince small customers that Westar power bills are actually a bargain.
“Including the increase, it will still cost most of our residential customers less than $3.50 per day to power their home and everything in it,” Martin said. “Or said another way, for the cost of less than 1 gallon of gas, you can power your home and all of its devices for 24 hours.”
He said the rate rebalancing is justified by economic modeling that shows big commercial and industrial users pay more than what it costs to provide them service, while residential and small-business customers pay less. He also tried to convince the audience that their higher power bills now will eventually benefit them by helping to create jobs and build a stronger state economy.
“There are two widely respected ways of doing these cost analyses,” Martin said. “Frankly, they show that smaller users like your home and mine are actually paying less than the cost of providing electricity, and many of our largest users are paying more that what it costs. That’s not good for Kansas jobs and our economy. It’s also not very fair.”
David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board, argued that it all depends on what economic model is used to evaluate costs of providing power.
He said Westar’s model weights costs toward peak power usage, shifting more cost to residential customers who air-condition their homes in the summer than to commercial-industrial users who draw power in a more steady fashion year-round.
He said a model that evaluates the cost in terms of overall usage shows that small and large consumers are now paying about what they should be paying.
In addition to changing its basic rates, Westar is also proposing to revamp a now-unused program that allows the company to give extra discounts to companies with new or expanding businesses in Kansas.
At present, Westar has commission approval to offer companies a 25 percent discount for the first year of their business or expansion. The discount automatically drops each year until the business pays full rates after five years.
Nobody is on that program now and Westar has testified that it has a “disincentive” to offer it to anyone because of a commission ruling eight years ago that said ratepayers could be made to bear only 40 percent of the cost of the discounts, while Westar would have to pay 60 percent from its shareholders’ profits.
Westar’s new proposal is to have ratepayers fund the entire economic development program, called Promote Kansas.
The money would come from funds Westar gets when it generates power to sell to other electrical systems. That money is now used to help pay down the cost of fuel for Westar power plants, which benefits all customers.
Because companies would have to work with a state or local economic development agency to qualify for Promote Kansas discounts, they would almost certainly already be getting other economic incentives such as tax breaks and special financing, said Sedgwick County Commissioner Richard Ranzau.
“That’s not economic development, it’s wealth redistribution and, in this case, corporate welfare,” Ranzau said.