Board: Westar notice fails to detail changes in billing, solar rates

Most of Westar’s requested rate increase is to pay for required environmental upgrades at the La Cygne coal power plant and the cost of extending the life of the Wolf Creek nuclear power plant in Coffey County.
Most of Westar’s requested rate increase is to pay for required environmental upgrades at the La Cygne coal power plant and the cost of extending the life of the Wolf Creek nuclear power plant in Coffey County. AP

Wichita electric customers will soon get to weigh in on a Westar Energy proposal to raise the average bill by $13 a month.

But the state’s consumer advocate says the company and state regulatory staff are glossing over major changes in how you’d be billed for power and proposed rate designs that could kill home solar energy.

The Kansas Corporation Commission has scheduled public hearings later this month in Wichita and Topeka for customers to comment on Westar’s request to raise rates by $152 million a year, a nearly 8 percent increase over current rates.

Most of the rate increase is to pay for required environmental upgrades at the La Cygne coal power plant and the cost of extending the life of the Wolf Creek nuclear power plant. Repaying the company for those increased costs is essentially required by state regulatory law.

But the company also is proposing new and significant changes in how consumers would be billed for power usage, changes that aren’t detailed in the hearing notice that went out to customers, said David Springe, chief consumer counsel for the Citizens’ Utility Ratepayer Board. The board is a state agency that represents home and small-business customers.

Westar’s proposed rate design would increase the basic charge for residential service by $3 a month each year for the next five years. That means the cost to just keep the power on would increase from the current $12 a month to $27 a month. Customers who want to install their own solar or wind power would pay more.

“It would have been nice if that tidbit was included in the notice for the public to understand what is actually being proposed,” Springe said.

Springe argues that Westar’s proposed rate design changes would fall hardest on the poor and elderly, as well as people with small homes or apartments who don’t use much power.

In addition, he said, shifting from usage-based rates to bigger basic charges reduces Westar’s business risk, without providing corresponding benefits to customers.

Increased rates, new options

In written testimony in the case, Westar argues that increasing the monthly service charge is a matter of fairness.

Most of the company’s costs are fixed, and basing rates on usage is unfair to big users, who shoulder a disproportionately large share of the cost of running the power system, Westar contends.

“I want to emphasize the fact that our proposals are designed with three main objectives in mind – to give customers more choices in how they purchase and use their electric service, to better match fixed costs and revenues, and better reflect cost causation in our rates to minimize one customer having to subsidize another,” Westar chief executive Mark Ruelle testified.

The quarter-page hearing notice that ran in newspapers around the state summarizes the controversy over rate design and solar-power rates in one sentence: “Westar Energy is also proposing new rate options for its residential customers and optional renewable energy programs.”

Westar wrote the notice and sent it to the commission staff for approval before releasing it to the public, said company spokeswoman Gina Penzig.

Commission spokeswoman Linda Berry also defended the notice, saying in an e-mail in response to Eagle questions that “The issue of increased rates and new options is mentioned in the notice. The notice is not intended to be a comprehensive review of the case.”

The commissioners will travel to Wichita on July 23 for a public hearing, with teleconferencing sites for customers to testify from Hutchinson and Pittsburg. A similar hearing on July 21 will take live input from Topeka, with teleconference links to locations in Emporia and Salina.

Solar customers

In addition to basic rate design, solar power is emerging as a battleground issue in the rate case.

Westar currently has only about 300 customers with home solar panels, but the industry is rapidly expanding as traditional power costs rise.

Ruell testified that the number of solar-panel customers rose more than 60 percent in 2014. A recent company survey found that almost seven out of 10 Westar customers were at least somewhat interested in installing solar panels at their homes.

Under Westar’s proposals, future solar customers would have to pay a premium to link to Westar’s power system, which supplies backup electricity when the sun isn’t shining.

They would have two choices: pay a $50 basic monthly service fee, or pay extra “demand charges” of $10 per kilowatt in the summer and $3 per kilowatt in the winter for their peak usage of Westar power.

Solar energy advocates say either option would pretty much strangle the rooftop solar industry, because home customers would have to pay both the cost of their panel installation and Westar’s higher monthly base rate.

“If Westar’s proposal is approved, it will eliminate the rooftop solar market in Kansas, it’s as simple as that,” said Sarah Wolfe of the Alliance for Solar Choice, an industry group. “Those rates would essentially make it completely un-economic for any Kansan to consider going solar.”

The alliance sought to intervene as a party in the case, but the commission denied that request after objections were raised by Westar and commission staff.

“Westar is following a national playbook … to shut out competition from rooftop solar,” Wolfe said. “So keeping us out of the discussion and proposing this in the first place is a way to make sure that Kansans don’t have the opportunity to choose rooftop solar and lessen their need for Westar as a utility.”

Like the change in basic rate design, Westar officials say the higher service rates for solar customers are justified as a matter of fairness.

Even if they generate some or most of their own power, solar customers are “still benefiting from using Westar’s generation, transmission, distribution, and customer service facilities as backup when the sun is not shining and the solar panels are generating no electricity and during cloudy periods when energy production is reduced,” testified Westar consultant Ahmad Faruqui. “In this circumstance, Westar essentially acts as a free backup battery for these customers.”

The cost is now spread across the entire customer base, not just solar customers, Faruqui testified.

Informal, formal hearings

Both public hearings in the case will begin with an informal session where customers will hear presentations and have the opportunity to question officials from Westar, the commission staff and CURB.

That will be followed by a more formal session where customers can speak directly to the commission about their views on the rate case and how they might be personally affected by the rate increase.

Only the comments from the formal session are made a part of the case record for commissioners to consider when they make their ruling in the case.

In addition to the public hearings, the commission has scheduled five days of court-like evidentiary hearings for official parties to the case, Aug. 17-21.

The deadline for setting new Westar rates is Oct. 28.

Reach Dion Lefler at 316-268-6527 or dlefler@wichitaeagle.com.

How to be heard

Ratepayers have several ways to comment on the Westar rate case:

▪ Testify at a public hearing

On July 23, a public hearing will be held at the Wichita State University Hughes Metropolitan Complex, 5015 E. 29th St. North, Wichita. The hearing begins with an informal question-answer session at 4:30 p.m., with testimony to commissioners set to begin at 6 p.m.

Teleconference links will allow questions and testimony from the public at the following sites:

Hutchinson: Kansas Cosmosphere, 1100 N. Plum.

Pittsburg: Pittsburg High School auditorium, 1978 E. 4th St.

On July 21, a public hearing will be held at Farley Elementary School, 6701 SW 33rd St., Topeka. Like the Wichita hearing, the question-answer session begins at 4:30 p.m. with testimony beginning at 6 p.m. Teleconference locations at Flint Hills Technical College conference rooms A, B and C; 3301 W. 18th St., Emporia; and Kansas State University College Center, conference room 103; 2310 Centennial Road, Salina.

▪ Call the KCC at 800-662-0027.

▪ E-mail the KCC at public.affairs@kcc.ks.gov.

▪ Comment on the website at www.kcc.ks.gov.

▪ Send a letter to the KCC at Office of Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027.

When submitting written comments, reference Docket No. 15-WSEE-115-RTS to ensure comments are routed to the right case file. Comments are due by Aug. 11.

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