Consumers express ire over Westar revenue plan

If anger could create electricity, there was enough power generated at a public hearing Thursday night on Westar Energy's proposed conservation plan to light up a small town.

The public comments overwhelmingly opposed the idea that could save power for some customers but also raise all customers' bills.

"Westar seems to think we're a cash cow," said Jerry Baker, of Wichita, who was one of 15 who spoke during the two-hour session at Wichita State University's Hughes Metropolitan Complex. "This is not right."

The plan is opposed by the Citizens' Utility Ratepayer Board, the state agency representing residential and small-business utility customers.

David Springe, consumer counsel for the board, agreed with Westar that the cost to all customers would be minimal. He said his biggest concern was that Westar's means to recover lost revenue would open the door for other utilities to do the same.

"This is the camel's nose under the tent," Springe told the audience. "It would be setting precedent for policy going forward. This will be the first case where the KCC would allow this type of lost-revenue mechanism."

Similar proposals put forth recently by Black Hills Energy and Kansas Gas Service were withdrawn by the companies, Springe said.

About 75 people attended the hearing. Ward Loyd was the only one of the three KCC commissioners at the meeting, but the other two will receive a transcript of the comments.

Westar is proposing to become a partner utility with Efficiency Kansas, a state program tapping federal stimulus money to assist Kansans with energy-efficiency improvements such as replacing inefficient furnaces.

Consumer advocates say they support the goal of reducing energy use, but object to provisions in Westar's proposal that would allow the company to recover revenue from lost sales to customers who cut their use.

Twelve of the 15 who spoke during the public comment period strongly opposed the idea.

"This would set a very dangerous precedent," said Diana Alexander of Wichita. "They're asking those who don't have the money to pay for the actions of those who do have the money."

Participants would receive an energy audit on their home or business to identify opportunities to conserve power. Residential customers would be eligible for loans up to $20,000, business customers up to $30,000.

While consumers could borrow directly through Efficiency Kansas and participating banks, Westar's program would allow participants to pay their loan directly through their power bill at no interest for 15 years.

Jim Ludwig, Westar's executive vice president for public affairs and consumer affairs, told the audience that power-bill repayment would provide a convenience to the customer in paying off the loan.

Westar would charge a one-time fee of $240 to compensate the company for its cost of administering the loan.

Not many seemed to object to that part of the plan. The controversy stirred over Westar's attempt to gain compensation for lost energy sales.

"I'd love to do less work and make more money," said Don Vaughn, a mechanical contractor from Wichita. "With all the costs (Westar) will be allowed to add to this, it'll be a giant elephant over the years."

Ludwig said recovering lost revenue by spreading the cost over the bills of all Westar customers would mean a next-to-zero increase on bills.

He gave an estimate that the company expects 240 customers would participate in the program the first year, resulting in an estimated lost revenue of $22,200. That amount would be spread over the bills for Westar's 687,000 customers in Kansas, he said.

Ludwig noted that the estimated lost revenue represents only 0.002 percent of the company's annual sales, which was $1.4 billion in 2009.

More customers would participate in the plan over time, increasing the cost for all bills. But Ludwig said those costs would be "zeroed out" each time Westar gets a rate increase.

Springe said Westar gets a rate increase every three to five years.

Dan Masterson, an energy auditor from El Dorado, was one of the few to support Westar's plan.

He said the costs proposed now would be "dwarfed by the costs" of Environmental Protection Agency's regulations down the road.

"We need to hedge off those costs," he said.

Ludwig said the plan would allow Westar to delay building more power plants, which he said is the most expensive component of the company's costs.

Deadline for public comment is Nov. 15. KCC must make a decision on Westar's request by Jan. 31.