Dive Brief:

• A complaint at the Federal Energy Regulatory Commission (FERC) by the Kansas Corporation Commission (KCC) accuses Westar Energy of $15.8 million per year in overcharges to its customers for transmission services. Westar argues the return on equity (ROE) from the bill charges produced shareholder benefits necessary to sustain transmission system investment.
• The rare action by a state regulator against a utility at FERC was necessary because FERC has jurisdiction over the interstate transmission system of which Westar’s lines are a part.
• The KCC found Westar’s 11.3% ROE, in combination with its transmission service bill rider, an excessive burden when “just a fraction of a percent” can cost Kansas ratepayers “millions of dollars,” according to the KCC filing.

Dive Insight:

Westar’s transmission costs are charged to consumers via a bill rider set by the Kansas Legislature that is independent of the ROE set by the KCC. Capital market conditions and long-term and short-term investment growth projections were very different in 2008 when the Westar rates were set.

The KCC filing: “The unjust and unreasonable level of the subject ROE is not a mere ‘unsubstantiated allegation,’ it is a documented fact that can neither be ignored or successfully disputed.”

Westar acknowledged the KCC for protecting ratepayers but said the action might save the average customer only $0.80 per month while discouraging investment in Kansas transmission infrastructure. The consumer counsel for the Citizens Utility Ratepayer Board CURB), the state representative of residential and small-business utility customers, supported the filing.