The Kansas Corporation Commission on Thursday granted Westar Energy’s request for a hike in residential and school transmission rates, while cutting rates for most business-class consumers.
The new rates will be temporary in the wake of a federal regulatory ruling that Westar has been overearning on the transmission piece of its business and bill refunds will be coming, but probably not for several months.
The new rates include a 31 percent increase in the transmission charge for residential consumers – about $4 a month for the average customer – and a 29 percent increase for schools.
Small businesses will get a 21 percent cut in their transmission charge, about a $31 decrease per month for the average user. The largest commercial and industrial customers will get about a 4 percent decrease while midsize businesses will pay about 1 percent more.
The commission had no choice but to approve the rate increase because of a state law passed by the Legislature in 2007. That law requires the commission to automatically approve Westar’s requests for transmission costs and profits each year as long as the company calculates them correctly.
“This approval is subject to refund should an investigation by KCC staff determine the increase is excessive,” said a statement issued by the commission after Thursday’s vote.
The statement said the KCC staff will conduct an audit “to ensure that Westar’s request is based on actual costs and applicable laws,” but it noted “The KCC cannot, however, alter the amount in the request.”
The rate increase passed with minimal discussion at the commission meeting Thursday.
Commissioner Pat Apple thanked his colleagues for granting a two-week delay to research why the rate increases fall so heavily on residential customers, but he said he was satisfied with the explanations he got.
This year, the transmission charge is being calculated based on a study of how much of the peak electric load each customer class uses, Westar spokeswoman Gina Penzig said. Residential customers use the most power during peak periods, so they pay the highest increase while businesses get cuts in their rates.
The transmission charge is a separate line item on customer bills and is in addition to the basic rates consumers pay for electricity.
The increase granted Thursday amounts to about $25 million a year in addition to the $78 million increase Westar got in September.
Some rate relief will be coming later this year because of a decision Wednesday by the Federal Energy Regulatory Commission.
The federal agency approved a settlement between Westar and the KCC to cut the rate of return Westar gets to make a profit for its shareholders.
The federal commission had ruled earlier that Westar’s current return, 11.3 percent, is too high. The settlement drops that to 9.8 percent.
Two weeks ago, a KCC lawyer said the change in return should decrease Westar’s transmission-charge increase from $25 million to about $7 million.
The federal ruling means that Westar will have to pay its customers back, with interest, for excess earnings going back to August 2014, when the commission filed the complaint that Westar was overearning.
Once the settlement works its way through the system and Westar gets new rates approved at the federal level, the company will return to the KCC so the new rates and refunds can be incorporated into customer bills, Penzig said.