State rejects Westar proposal, saving customers millions

State rejects Westar proposal, saving customers millions
Copyright 2019 by KOAMNewsNow KOAM. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

State utility regulators have rejected a request by Westar Energy to pass along the cost of buying 8% of the Jeffrey Energy Center.

The request would have cost electric customers an estimated $93 million during the next 15 years.

The Kansas Corporation Commission’s order, released Thursday, said Westar doesn’t need the extra power to meet customer demand.

Westar purchased the 8% share of Jeffrey Energy Center, near St. Marys, from its previous owner, in a deal that closed in August. The remaining 92% of the plant is owned by Westar and Kansas City Power & Light, which have merged.

Westar spokeswoman Gina Penzig said the company is evaluating the commission order. She said Westar disputes the estimate that the purchase would cost customers $93 million.

___

Media release from Kansas Corporation Commission

This morning, the Kansas Corporation Commission denied Westar Energy’s request for ratepayers to bear the cost of its seven-month lease and subsequent purchase in August 2019 of an 8% interest in Jeffrey Energy Center (JEC). Had it been approved, the cost to ratepayers would have amounted to approximately $93 million in increased rates over the next 15 years.

In rejecting the request, the Commission order states Westar failed to meet its burden of showing that its new lease and purchase agreement was a prudent decision for its retail customers and that Westar entered into the agreement knowing it did not need the 8% portion of JEC to satisfy its capacity requirements and the settlement agreement would increase customers’ rates.

Prior to the August purchase, Westar and Kansas City Power & Light owned 92% of the Jeffrey Energy Center (JEC). Midwest Power Company owned the remaining 8% and leased it to Westar. The power generated was sold to Mid-Kansas Electric Company through a Power Purchase Agreement. The lease and purchase agreements both expired on January 3, 2019. Westar then opted for a new lease and subsequent purchase of the 8% and asked the Commission to approve the recovery of costs through its Retail Energy Cost Adjustment (RECA) which is included in customer rates.

Today’s order does allow Westar to operate the 8% portion of JEC for wholesale sales and retain revenues resulting from that portion of the plant for their shareholders.

The Commission’s regulatory oversight requires balancing the interests of the public and the utility while ensuring reliable and cost efficient service.
Today’s Commission order can be viewed at: http://estar.kcc.ks.gov/estar/ViewFile.aspx?Id=a3473a11-528a-46eb-9195-7b5425701361

___

Get the latest local and national headlines straight to your email for free: Sign up here.