Westar Energy is seeking to increase the cost of electricity in Kansas.
Anyone may make comments regarding the proposed rate increase request at 6 p.m. Monday, July 1 in Room 132 of the Fred Sudermann Commons at Wichita State University (5015 E. 29th St. North). Written comments can be submitted through Sept. 23 to the Kansas Corporation Commission, Office of Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS 66604-4027 or via email to [email protected] All written comments should reference Docket No 13-WSEE-629-RTS.
June 28, 2013
Commissioners Oppose Electric Rate Hike
From: Karl Peterjohn & Richard Ranzau, Sedgwick County commissioners
The Kansas economy continues to struggle. Many Kansans have lost their jobs or have been relegated to part-time employment following the economic downturn that began in 2008. At the same time the state of Kansas has created the Renewable Portfolio Standards (RPS) mandate onto power producers at the state level. At the same time that this new state mandate occurred there has been a substantial increase in natural gas production resulting in declining prices for this form of energy.
We believe that these events are related to this proposed increase. The $31.7 million proposed residential rate increase is more than just a rate hike, but is actually also a rate shift onto residential users and smaller firms while it is partially offset by reductions for large electrical users. This might be overlooked when one considers that the percentage overall increase will be cited as only , “… 1.7% …,” like the leading sentence in the Westar ad that appeared in the Wichita Eagle June 9, 2013 stated.
Residential consumers are facing an 8.77% ($62 million) electrical rate hike. This is excessive. Smaller businesses are facing a 6.28% percent ($21.5 million) rate hike. This is also excessive. This is an $83.5 million proposed increase is occurring at a time when the federal government is claiming that consumer price increases are rising at less than 2 percent a year.
This is almost five times higher than overall inflation for Kansas consumers. This is an outrage at a time when the Kansas economy continues to struggle. This is the 19th rate increase that Westar has requested since 2009.
Natural gas and other carbon based fuel prices continue to be very competitively priced even though coal remains as the least expensive option for producing electricity. In fact, the rise in natural gas production due to fracking and drilling of “tight” geologic formations has increased the amount of energy that is developed and available in our country. In fact, we believe that the payback time for co-generation of electricity utilizing natural gas as a reliable source is one of the reasons for the requested reduction in rates that is part of this case.
Natural gas power co-generation will also be needed to provide a reliable backup for the inherently intermittent non carbon based power sources sought by the state’s RPS mandate. This backup capability must also be paid for.
The fact that natural gas power generation is more feasible due to its favorable pricing is a factor in the portion of this requested rate reduction of $30.3 million for a number of potential co-generators who might be considering utilizing this lower cost energy. The high load factor industrial users are projected to receive a rate reduction that is on a percentage basis almost the inverse percentage of the proposed residential rate hike (-8.38%) $17.4 million.
If Westar wishes to reduce their rates by $30.3 million for industrial users, special contract customers, medium general service customers, or schools, that is their prerogative. We suspect that this proposed decrease is tied to new co-generation options and the desire to preserve this customer base. However, just shifting these costs onto residential and small business consumers should be stopped.
There is another important factor that must be considered. The state’s RPS is forcing higher prices. There are few who are willing to point out this politically incorrect fact. This new state mandate onto energy producers (including Westar) require that an increasing percentage of electrical power be generated by non carbon or uranium based energy sources. Whether this is solar, wind power, or any other politically correct power should be recognized as part of the reasons for this and, in our opinion, future electric rate hikes that will occur due to the higher cost of politically correct power generating sources. All Kansas electrical producers are already feeling the impact of this new state mandate onto the utilities.
This is especially true in light of the most recent statements being issued this week by President Obama in his war against American energy in general, and coal powered electricity in particular. A large majority of the electrical power generated in Kansas comes from coal fired power plants and this has been easily the least costly option for producing electricity in this state.
Here are the recommended steps that the KCC should enact concerning Westar’s rate case:
Limit any residential rate hikes to the increase in the consumer price index (CPI) for Kansas.
Provide an adjustment for non controllable increases in costs due to rising property tax rates proportionately to their taxable property in the various tax jurisdictions where Westar operates. This should be considered as part of the consumer price index.
Westar needs to identify the increased costs in their base due to the Renewable Portfolio Standards (RPS).
All electricity producers in Kansas should also provide this information to the KCC for public distribution.
Rate increases due to RPS should be limited to a percentage of the total RPS cost. The KCC should not allow the full cost of RPS to be placed on consumers.
This amount should be identified before any increase is allowed.
Similar federal mandates need to be identified and included in any RPS data. The role of state and federal mandates onto rapidly rising electric rates needs to be clearly identified before any rate requests are considered.
The overall rate hike needs to be capped for all categories of Kansas electrical consumers. This would be true if the allowances for increases in 1)-to-3) exceeded five percent, like for most Westar customers, in this rate hike request. The RPS cost structure is self imposed, statutory public policy decision made by the legislature and governor when this statute was enacted several years ago under then Governor Parkinson. It is important that this information be provided to all Kansans as long as this statute is law. The 2013 legislature decided not to change this mandate. This RPS statute is driving rate increases in this state and in other states that have enacted similar statutory mandates onto their electric companies.
The average residential customer should not be facing an electrical rate hike at almost 9 percent. Shifting the electrical rate structure onto residential consumers is excessive. There should be a cap at a much lower level tied to the CPI.
If state RPS mandates continue generating rate increases, these mandate will need to be examined by the legislature and the governor for reform and repeal to prevent this and future electricity rate hikes created by government’s politically correct power generating mandates.
If federal regulations create or extend these state RPS mandates and continue raising electricity costs, these costs must also be identified. This will also require a political solution.