Westar Energy seeks cost recovery for investments

Westar Energy, Inc. filed with the Kansas Corporation Commission (KCC) a limited rate case seeking cost recovery for investments in the second phase of its Emporia Energy Center and two Westar-owned wind farms in Kansas that were under construction but not in operation at the conclusion of the company's 2008 rate case.

This rate review was agreed to as part of the agreement reached by all parties in the 2008 case, which the KCC approved in January 2009. Westar Energy is seeking a $19.7 million or 1.5 percent rate increase in this limited filing. The increase in the north region is $9.7 million and in the south region it is $10.0 million.

"Although electric rates are going up, we managed our natural gas plant and wind farm construction costs closely, and they came in more than $22 million under the original cost estimates and the amounts the KCC indicated would be allowed for recovery in rates," said Bill Moore, Westar Energy president and chief executive officer. "We continue to work to meet our customers' electricity needs as well as to develop Kansas renewable energy resources. Our Emporia Energy Center is excellent for following the variability of wind production. The completion of these generating facilities is part of our comprehensive energy plan that includes significant investment in new transmission, emission controls and our energy efficiency programs."

The process for this rate case will be similar to a traditional rate case filing at the KCC, with the application strictly limited to costs associated with the construction and operation of wind generation owned by Westar and the second phase of the Emporia Energy Center.

Should the KCC approve the company's new rate request, the new average residential rate will be 9.33 cents per kWh for Westar North and 9.11 cents per kWh for Westar South. The average national residential rate is 11.52 cents per kWh. A residential customer using 900 kWh in Westar Energy's north region can expect an increase of about $1.43 per month. In the south region, a residential customer using 900 kWh can expect an increase of $0.71 per month.

The company's new natural gas-fired peaking plant, Emporia Energy Center, was completed in two phases. The first, generating about 345 megawatts (MW) of electricity, was completed in spring 2008. The second phase was completed in February 2009. Emporia Energy Center has approximate generating capacity of 665 MW. The 2008 rate case dealt with the first phase of the power plant. This second, limited rate case will address the remaining investment Westar Energy has made in the plant.

In addition, the company committed to obtain renewable energy from three wind farms in Kansas. Meridian Way Wind farm is located near Concordia in Cloud County. Westar Energy has a purchased power agreement with Horizon Wind Energy, the owner of that wind farm, which has generating capability of 96 MW. Westar Energy owns half of the Flat Ridge Wind Farm in Barber County and BP Wind Energy North America Inc. owns the other half. Flat Ridge has total generating capability of 100 MW. The third wind farm, Central Plains, is located near Leoti. Westar owns all of Central Plains, which has generating capability of 99 MW. The 2008 rate case results did not take into account all of the company's investment in wind generation, and all parties agreed to revisit the issue during this limited rate case.

Westar's northern region rates apply to approximately 366,000 customers, including customers in Topeka, Lawrence, Olathe, Leavenworth, Atchison, Manhattan, Salina, Hutchinson, Emporia and Parsons, among other towns and rural areas. Westar's southern region rates apply to approximately 315,000 customers in the Wichita area, Arkansas City, El Dorado, Newton, Fort Scott, Pittsburg and Independence, among other towns and rural areas.