Westar Energy filed Monday for a $125 million annual increase in rates that would boost an average customer’s bill by about $13 a month.
Most of the increase would pay for mandatory environmental upgrades at Westar’s coal-fired power plants and measures taken to extend the life of the Wolf Creek nuclear plant, of which Westar owns 47 percent, company officials said.
The company also is seeking approval of a charge on bills, in addition to the basic rate increase, to pay for strengthening the power delivery system to better withstand storms. The proposed amount of that charge was not immediately available.
And Westar is seeking permission to change its billing structure by increasing the monthly service charge while decreasing the cost per kilowatt-hour over time.
The filing was delivered to the Kansas Corporation Commission late Monday and was not immediately available for review. It will trigger a lengthy process of analysis and hearings, leading to a commission ruling late this year.
Niki Christopher, a lawyer for the Citizens’ Utility Ratepayer Board, said she had not had a chance to go over the filing in detail late Monday. However, she said the state agency, which represents residential and small-business customers, will challenge Westar’s proposal to stay at a 10 percent return on equity, which funds shareholder profit.
“KCP&L (Kansas City Power & Light) is already at 9.5 percent,” Christopher said.
She said the board also will probably challenge the additional bill rider for improvements to the delivery system. She said the company already has bill riders for fuel costs, transmission costs, environmental costs, energy efficiency programs and property, franchise and sales taxes.
Each rider shifts part of Westar’s business risk to customers, she said.
“At some point, we’re going reach a breaking point on line items on bills,” she said.
Jeff Martin, Westar’s vice president of regulatory affairs, said nearly half of the proposed rate increase will be used to cover the cost of environmental upgrades at the coal plants, especially the La Cygne generating station about 60 miles south of Kansas City. The improvements were required to meet federal Clean Air Act standards.
Roughly a third of the increase will pay for upgrading and replacing equipment at Wolf Creek, Martin said. Part of that will be new equipment needed to extend the plant from its original 40-year projected life span to 60 years.
The plant also requires some upgrades to meet new federal safety standards stemming from lessons learned in the 2011 nuclear accident at Fukushima, Japan, Martin said.
Westar also hopes to offer customers three options for billing, all of which would shift customer costs away from per-kilowatt-hour usage charges and toward the basic monthly service charge.
For standard accounts, the fixed monthly service charge would rise from $12 to $27 a month, phased in over a four-year period. The usage charge would be reduced in steps to offset the increase and make it “revenue neutral” for Westar, Martin said.
Westar also wants to offer two new billing options.
One would allow customers to voluntarily accept a higher monthly service charge and a lower kilowatt-hour usage charge. For customers, the advantage would be to spread the cost over the course of a year and avoid huge bill spikes during the summer, when air-conditioner usage is highest, Martin said.
The other option would include a “demand charge,” which would give homeowners a break on bills if they use less energy during peak demand periods. Such programs are already common for Westar’s business customers, Martin said.
Reach Dion Lefler at 316-268-6527 or email@example.com.