Westar Energy faced a hostile crowd of about 100 Wednesday night at a public hearing on the company’s request for a $90.8 million rate increase.
Wichita-area residents pressed company executives over their request for a 10.6 percent rate of return for their shareholders, and questioned whether the company is trying to raise rates to make up for lost power sales due to customer conservation — a claim Westar denies.
“We are in a depression and people are hurting very badly,” said customer Janice Bradley. “These are hard times. The number of children who are hungry is increasing and their parents are having a hard time. And Westar sees fit to try to demand more than 10 percent return for their shareholders. This is a shame. Shameful.”
The KCC sets Westar’s rates based on two main factors, its cost of providing power to its 687,000 customers, plus a rate of return granted to allow the company an opportunity to make a profit.
Westar has asked the Kansas Corporation Commission to allow it to increase its rates primarily to offset increased expenses for employee pensions, to expand tree trimming and to offset the effects of a cold summer and reduced power usage during the test year used to determine the company’s cost of doing business.
Many of the approximately 30 people who testified to the commission said they are hurting economically and that Westar should share the pain through a smaller guaranteed return.
“We’re getting screwed, let their shareholders take it too,” said customer Russ Pataky, to applause from the crowd.
After the meeting, Westar CEO Mark Ruelle defended the company’s request for a higher percentage for shareholders.
He said it is necessary for the company to raise its rate of return on equity from the current 10.4 to 10.6 percent to continue to attract investment capital for power plant refits and other improvements.
He also said that while Westar’s guaranteed a return, it’s not guaranteed a profit level. The company’s actual profit level is now about 7 1/2 percent and it’s unlikely to actually reach the 10s anytime soon.
Numerous customers, including veteran utility advocate Margaret Miller, 92, accused the company of penalizing conservation by raising rates to offset reductions in sales.
Shelley Durham, a customer from Hesston, said her most recent bill showed she had cut her energy usage substantially but still paid more on the bill.
“I used 15 percent less kilowatt hours November of this year than last year, and my bill is 41 percent higher,” she said. “In a time period where salaries have remained stagnant over the past few years, it seems irresponsible for Westar to again be requesting a hike in rates.”
Ruelle said that customers were misinterpreting that part of Westar’s request. Rather than a penalty for conservation, it was an adjustment to make sure Westar is paid its costs based on an average year, not an unusually cold or hot one.
During a question and answer session leading up to the formal testimony, customers mocked a Westar PowerPoint slide showing the pace of its increases in the last 10 years.
The company’s vice president of strategy, Greg Greenwood, displayed the slide to show that prices for other products had risen faster than the cost of electricity.
But what customers noted was that the company’s rates were steady and at times even decreasing in most of the last decade before jumping nearly 30 percent since 2007.
The main reason for the increase is that Westar is now allowed to seek increase between rate cases for items such as environmental and transmission costs.
One question that was asked but went unanswered during the hearing was how many of Westar’s employees earn in excess of $100,000 a year.
Judging from applause, consensus seemed to be that Westar was overpaying its executives.
Before raising rates, “why don’t we start by making upper management, of all salaried positions, but especially upper management, taking a six to 12 percent cut in their pay,” said Charlie King.