Kansas utility agrees to scale back proposed rate hike

JOHN HANNA, Associated Press

Kansas' largest electric company reached an agreement Thursday with a consumer advocacy agency and other parties to scale back a proposed rate increase.

TOPEKA, Kan. (AP) — Kansas' largest electric company reached an agreement Thursday with a consumer advocacy agency and other parties to scale back a proposed rate increase and postpone changes in charges for customers who install solar panels.

Topeka-based Westar Energy Inc. had sought to increase its rates to bring in an extra $152 million a year, but agreed instead to an increase of only $78 million. Both the staff of the rate-setting Kansas Corporation Commission and the Citizens' Utility Ratepayers Board, which represents residential customers and small businesses, initially wanted an increase of less than $56 million.

The utility said that under the agreement, most households would see their electric bills rise between $5 and $7 a month. Westar has nearly 700,000 customers in Kansas.

The deal involves all parties in Westar's rate case before the KCC. The three-member commission still must sign off, and state law gives it until late October to decide.

Westar had said it needs to impose higher electric rates to cover costs already incurred for improvements mandated by federal air pollution standards, primarily at a plant near LaCygne in eastern Kansas, and for upgrades at the Wolf Creek nuclear power plant outside Burlington. The utility also planned to spend $220 million over five years to upgrade its electrical grid.

Westar CEO Mark Ruelle said the agreement still will allow the company to make "limited investments" in its grid. The company estimated those investments at $50 million.

"We understand the need to have a balanced, constructive approach to regulating our business, yet still allow us to provide clean, reliable, safe and cost-effective critical service for our customers," Ruelle said in a statement.

David Springe, the consumer board's chief attorney, said the agreement is "a pretty decent deal" because Westar would have been allowed to boost its rates to recover the cost of power plant improvements anyway.

"There's not an awful lot of room over and above that," Springe said.

Westar had proposed increasing its basic monthly residential service charge from $12 to $15 this year, then to $27 by October 2019. Under the agreement, the charge would increase to $14.50 and stay there for at least a few years.

The agreement also postpones a decision on Westar's proposal to revise special rates for customers who install solar panels. The company wanted to give them a choice in the future of paying a higher monthly service charge or an additional charge based on their peak electric use.

The company said the 300 customers with existing solar panels would not be affected and the changes would ensure that solar users pay their fair share for Westar's system. But green energy advocates said the changes would eliminate incentives to install solar panels and kill the solar industry in Kansas.

Under the agreement, the KCC would consider such issues in a separate case later.

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