Local

What you need to know about Westar's proposal to increase your electric rates

Westar Energy is proposing a substantial rate hike and changes in the way you're billed for electricity.

And the opening shots in a months-long battle over new rates will be fired in a public hearing next week in Topeka..

If the company's proposal is approved, rates would drop briefly by a small amount and then rise by a much larger amount early next year.

The new rates will be set by the Kansas Corporation Commission, the state's utility regulation agency, after a court-like rate case unfolding in the next few months. A decision is expected on Sept. 27.

Here's what you should know about the case and how it could affect your electric bills.

So Westar is planning to lower rates briefly and then raise them? What's up with that?

It's a timing issue, and some moving parts could affect the final outcome.

The KCC has ordered all the state's utilities to pass along to customers the money they will get from tax cuts passed by Congress and President Donald Trump.

The Westar plan is to go ahead and do that first (along with some other financial adjustments), which would mean a $1.5 million net decrease in rates with a very slight cut in customer bills starting in September.

But that decrease would be overwhelmed by cost increases proposed in the larger rate case, a request by Westar to add a net $52.6 million to its annual rates starting next February.

However, these numbers could change in a big way if the commission approves a separate proposal in another KCC case where Westar is seeking to merge with Kansas City Power & Light.

The merger would save an estimated $35 million in operating costs, savings that would be passed on to consumers. So if the commission approves the merger and the deal closes, the overall rate increase proposed would be about $17.6 million, Westar spokeswoman Gina Penzig said.

How much is this going to cost me?

In part, it depends on the amount of energy you use, because rates are split into two components: a flat monthly service charge and a charge for the amount of power you use.

Westar is calculating that an average customer, using 900 kilowatt hours per month, would see a $5.91 increase in the monthly bill if the merger doesn't go through and about $2.80 a month if it does.

Utilities seldom get everything they ask for, so the actual numbers could be lower in the end.

An Ocean Springs resident explains how a bi-directional meter works. Some people are able to sell the excess energy that their solar panels produce back to utility companies.

In addition to higher rates, what else does Westar want?

Westar has asked to increase the monthly service charge by $4 a month, from the current $14.50 to $18.50.

In essence, it costs about the same to deliver electricity to a customer whether they use a lot or a little, and Westar wants to shift more of the fixed cost of running the system to the fixed monthly service charge, Penzig said.

That would reduce business uncertainty for Westar, because the company would get more money from the base service charge. That's essentially guaranteed money that's unaffected by the weather or other factors causing variations in power sales.

It's controversial. Critics say increasing the monthly service charge shifts costs to those who are the least capable of paying.

"That really hits low-income people," said Rep. Tom Sawyer, D-Wichita. "That's a flat fee that's going to go up. I just think that's unfair. When you look at what they're asking for, the rate increase is hitting people who don't use very much a lot harder than people who use a lot."

Who makes sure customers' rights are protected?

There are two main safeguards for customers. The first is the Corporation Commission. Its legal mandate is to ensure that rates are reasonable for both customers and the company.

Residential and small-business consumers are specifically represented in rate proceedings by the Citizens' Utility Ratepayer Board, a small state agency.

Other customers can also intervene to make sure their interests are protected. Walmart, Tyson Foods, Goodyear, Occidental Chemical, the Wichita school district and the Sierra Club are among the players.

As a customer, do I have any choices?

You might. Westar is proposing to reinstate a program it had in part of its service area in the late 1990s and early 2000s, called residential peak efficiency rate.

The way that would work is you could sign up for a plan that would reduce the amount you pay per kilowatt hour for electricity.

But you'd pay a calculated monthly charge based on your highest energy usage between 2 to 7 p.m. on weekdays when the strain on Westar's system is at its highest.

The peak rate would be measured by your highest usage during a one-hour period, averaged by 15-minute blocks, Penzig said.

The peak kilowatt usage during that hour would be multiplied by a dollar figure, $3.15 in the winter and $9.45 in the summer. That charge would be in addition to your regular service charge and the price for your regular electric use.

Would I save any money if I chose the residential peak efficiency rate?

It's impossible to say, because it varies from home to home, based on who lives there and how they use energy.

You could save money if you can keep your energy use down during peak hours, because your rates for the whole month would be lower. For example, a person who is at work during peak energy hours could set the air conditioner to be off during the day and turn on after 7 p.m. to keep peak usage at a minimum.

Westar offers a web app to let you monitor your power use.

Some customers like it so much that they've stayed on the program — grandfathered in — even after Westar discontinued it 12 years ago.

But you could easily end up paying more if you have high peak usage regularly or even just have one high-use spike for an hour out of a given month.

If I do pick the peak efficiency rate, am I stuck with it?

Yes and no. If you choose that option, the standard enrollment period would be one year, Penzig said. But because the program would be new, Westar plans to offer a one-time opportunity to quit and go back to basic rates if you decide it's not for you, she said.

Why is Westar asking for more money?

The company cites several cost increases as driving the need for a rate increase.

1. A new wind farm: The time has come for Westar to start recovering the cost of the $400 million-plus Western Plains wind farm near Spearville.

2. Changes in power sales: Westar has had some long-term contracts to sell power to other Kansas utilities. One of those big contracts, with MKEC, is now expiring, and there have been changes in the way power is distributed, so that company won't want to renew.

3. Expiring tax credits: With encouragement from the state government, Westar built and contracted for a lot of wind power. Your bill benefited from federal tax credits that subsidized the cost of wind farms for their first 10 years. Now Westar's wind farms are getting to be 10 years old and the tax credits are expiring.

4. Depreciation adjustment: As power plants and other Westar assets age, they become less valuable and are ultimately scrapped (much like your car as it gets older). The cost of power plants is spread out over time, but the total length of service for the plant isn't known until it's worn out and retired.

If you pay it off too fast, it's unfair to current customers who end up paying higher bills than they should. If you pay it off too slowly, it's unfair to future customers who'd end up paying for assets they've never benefited from.

The KCC requires that depreciation be updated every five to seven years. This is one of those years.

Is Westar saving us any money?

The short answer is yes.

The company's taxes have gone down because of federal tax-law changes. And long-term savings are anticipated from the proposed merger with KCP&L if it goes through. The company has also saved customers money by refinancing debt at lower rates.

However, Westar's savings aren't enough to cover its cost increases, so the net result is increased rates for customers.

Can I tell the commission what I think?

Yes, you can. There will be a public hearing Tuesday evening in Topeka.

Anyone can go to that meeting and testify directly to the commissioners about how the proposed rate increases could affect them. Anything said in the meeting becomes an official part of the case record, and commissioners can use it to guide and justify their decisions.

The meeting will begin at 6 p.m. at the Washburn Institute of Technology Main Conference Center, Building A, 5724 SW Huntoon, Topeka.

Do I have to go all the way to Topeka?

Not necessarily. If you want to have input but can't get to the public hearing, you can comment online, by mail or by phone.

Online: Go to the commission’s website, www.kcc.ks.gov, and click on the “Your Opinion Matters” link to enter your comment.

By mail: Write to the Kansas Corporation Commission, Office of Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027. In you comment, reference Docket No. 18-WSEE-328-RTS to ensure it gets attached to the right case.

By phone: Call the commission’s Office of Public Affairs and Consumer Protection at 800-662-0027.

Note: an earlier version of this story contained an incorrect figure for the total amount of the rate increase if the Westar/KCP&L merger is approved.

Dion Lefler; 316-268-6527, @DionKansas
  Comments