U.S. Markets open in 1 hr 6 mins

Westar asks Kan. regulators for $32M rate increase

John Hanna, Associated Press

TOPEKA, Kan. (AP) -- Kansas' largest electric utility asked state regulators Monday for permission to raise an additional $32 million more each year by raising rates for residential customers while reducing costs for large and medium-sized businesses.

Westar Energy Inc. said its nearly 600,000 residential customers would see their rates rise by about 8 percent, which it said would amount to an increase of $7.50 or less for two-thirds of them. For about 150,000 residential customers, the increase would be $4 a month, the utility said.

Westar said its plan would reduce rates by 5 percent to 10 percent for some 5,500 businesses. The utility said such businesses have seen their rates increase more quickly in recent years than similar businesses in other states, and Westar wants to make Kansas more competitive economically.

Topeka-based Westar said that under the proposals it filed with the Kansas Corporation Commission, the effects of any rate increases would be softened by the utility's trimming of $10 million in annual costs and creating a new fund to provide help to poor consumers having trouble paying their electric bills.

The overall increase in Westar's rates would be 1.7 percent, and the utility would use new revenues to pay for upgrading the pollution controls on its coal-fired La Cygne generating station in eastern Kansas, about 50 miles south of Kansas City. Westar, which owns half of the station, is halfway through an upgrade required by the federal Environmental Protection Agency and expects to finish the project in 2015.

"Electricity provides great value, and we are looking to the commission to allow us tools that help keep it affordable as costs rise," Mark Ruelle, Westar's president and chief executive officer, said in a statement. "First, we need to make sure rates are fair and reflect the cost of providing service to each type of customer."

Westar last received a general rate increase in April 2012, when the KCC boosted its charges by $50 million and said Westar shareholders could earn a 10 percent profit.

The Citizens' Utility Ratepayers Board, a state agency representing residential and small-business customers, argued that last year's increase was excessive, and David Springe, CURB's chief attorney, said Westar's latest proposals would maintain the same return for shareholders. He also said Westar's request is unfair because it favors larger businesses.

"It's an incredible shift from these businesses onto the backs of residential customers," Springe said. "They should be outraged about how they're being treated."

But when announcing its proposed rate hike, Westar said that rates for large and medium-sized businesses have risen quickly enough that they "no longer reflect the cost of providing electricity to these firms."

Ruelle added: "Many of the investments we must make to meet federal laws are the same regardless of how many units of electricity we sell. If we can help expand the state's economy, these costs are spread over a broader base and everyone benefits."

Westar also said it would dedicate 10 percent of its gains from selling electricity to other utilities to the new fund to help customers struggling with their bills. Spokeswoman Gina Penzig said such sales fluctuate year to year, but based on 2012's figures, the fund would receive $650,000.

In regular trading Monday, shares of Westar closed down 1.8 percent, at $33.19.


Follow John Hanna on Twitter at www.twitter.com/apjdhanna