KCC investment rulings might save customers money

TOPEKA, Kan. (AP) — Recent Kansas Corporation Commission decisions on investment returns could save customers of two utilities millions of dollars but that does not mean the commission has changed its policies, according to a KCC spokesman.

The KCC recently filed a complaint with federal authorities arguing Westar Energy is charging too much return on equity for its transmission projects. Westar currently charges 11.3 percent and the KCC argued it should be 9.37 percent. The reduction could drop rates $15.8 million annually. Return on equity measures as a percentage how much profit a company generates with the money shareholders have invested.

The commission also recently approved up to a 9.1 percent return on equity for a rate case involving Atmos Energy, although the company asked for a 10.53 percent rate of return. The KCC said a 9.1 percent rate increase would raise rates about $4.2 million, while 10.5 percent would increase rates by $6.3 million, The Topeka Capital-Journal reported.

The returns approved for the two utilities don’t signal a policy shift, said KCC spokesman Jesse Borjon, who said the commission will still consider each request on its own merits.

Return on equity is one of several costs passed on to customers that the KCC must approve. In some cases, such as transmission charges, the state can argue before the Federal Energy Regulatory Commission, the national body which sets the return on equity.

The 9.1 percent rate in the Atmos case is low compared to averages in Kansas and across the country, said David Springe, consumer counsel for the Citizens Utility Ratepayer Board, which represents residential and small business customers in KCC rate cases. He said the lower returns benefit consumers because the utility doesn’t have to raise rates as much to fulfill commitments to investors.

“I’m optimistic that the commission is going to continue these very consumer-oriented policies,” he said.

James Bartling, spokesman for Atmos Energy, said the company hadn’t decided if it would appeal KCC’s decision.

Westar spokeswoman Gina Penzig said the 11.3 percent rate request was established several years ago but the company and the KCC have been unable to agree on transmission return on equity, leaving the issue before the national regulator.

Penzig said a lower rate of return could make investors reluctant to buy stocks or bonds from Kansas utilities, making it harder to attract capital and build projects. Kansas already has the 14th-lowest average return on equity, she said.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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