Nobody likes to pay more for power, which is what Westar Energy’s northern Kansas customers soon will do. And all of the state will face the uncertainty brought on by Westar’s new ability of pass fuel and environmental costs directly onto consumers. But it’s to the Kansas Corporation Commission’s credit that Westar’s newly approved 4.7 percent rate hike in the north is accompanied by a 4.2 percent cut in the southern region that includes Wichita. That disparity is fair because former KGE customers in the south have long paid much higher rates for the same power as the former KPL customers in the north, owing to an outdated plan to pay off the Wolf Creek nuclear power plant. Westar was denied its desired $84 million rate hike Wednesday, but the KCC’s action also rightly endorsed the tremendous strides made by Westar’s new leadership to reduce debt and right the company’s course after its disastrous David Wittig era.
Posted by Rhonda Holman
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13 Comments
A 10% DECREASE in electrical rates should be immediately put into effect until (1) all Westar board of directors members who served during the time Wittig and Lake were running/ruining the company and failed to blow the whistle are eliminated from the Westar board; (2) Wittig and Lake are actually in prison and their legal bills not charged to Westar customers or dividends; 3) all non-regulated activities are eliminated from Westar’s portfolio; 4) company airplanes be eliminated; 5) the remainder of the $3.6 billion debt accumulated by Wittig/Lake is paid off; and 6) other prudent management practices deemed to be needed be put into effect such as independent audits, etc.
Westar shareholders should not receive dividends until the debt accrued during the forays into non-regulated businesses is paid off. THE SHAREHOLDERS APPROVED THESE EXPENDITURES INCLUDING WITTIG’S LAVISH LIFESTYLE. Any profit margin calculation done by the KCC for the REGULATED UTILITY should b done based SOLELY on that regulated utility. Debt service on non-utility indebtedness should be excluded from any such calculation.
If the gambles had been successful the shareholders would properly reap the rewards. As the gambles failed they should properly shoulder the loss.
The people in Salina and Topeka will have just one more reason to hate Wichita. Westar was always good at turning people against eachother.
Let’s not forget, Ben, that Westar is also paying for his legal defense, per his contract. I have no problem with paying taxes to defend indigents, but this is a far different situation.
Good point rage. The shareholders approved those contracts; they are a part of the entire foray into non-regulated non-utility businesses (e.g. Protection One). That was their right as capitalists. However, just as any profits from those ventures rightfully would have belonged to the shareholders who approved the forays; so should the costs associated therewith accrue to the shareholders.
The whole thing is that the books should be segregated: allow an appropriate profit to be generated by the regulated utility; then allow the non-regulated busineses make or lose money as they may. However, in no way whatsoever should the ratepayers be expected to subsidize the forays into non-regulated businesses. The SHAREHOLDERS approved all this; NOT the RATEPAYERS.
yeah westar sucks…but my kansas gas bill is getting way outta hand.
Oh my God! My gas bill was outrageous!!!If my electricity follows suit, I’m going to go live in a box down by the river!
Im going to start paying my gas and electric bill in pennies. It will inconveance them more than me
Ben Huie: I hope you are still paying attention to this blog. I presume when you say the “shareholders approved such and such,” you mean Westar’s Board of Directors who speak for the shareholders and supposedly gave guidance to Mr. Wittig and Mr. Lake. Of course, with so many shares outstanding in this utility company, the individual shareholder has very little say in the running/ruining of the utility company. In fact, I believe currently the largest stockholders are mutual fund companies such as the one headquartered in Kansas City.
Speaking of the Kansas Gas Company, as I understand it, Western Resources formerly owned a portion or all of it. But in the process of following the KCC’s orders to reduce the massive debt of $3.6 billion run up by Wittig/Lake partially for gigantic losses by subsidiary, Protection One, Kansas Gas Service was sold to ONEOK utility company in Oklahoma. As a result, among other things, all of us ratepayers now have to pay two separate bills each month, bills which formerly tended to balance each other out over 12 months because of the nature of electricity and natural gas usage. Now ratepayers will get screwed by two companies rather than one. I’m also not sure if the State of Kansas regulator group, KCC, moniters the ONEOK/Kansas Gas service to protect Kansas ratepayers.
As usual, the situation is getting worse rather than better for the people who have to pay the bills.
Ben Huie: I hope you are still paying attention to this blog. I presume when you say the “shareholders approved such and such,” you mean Westar’s Board of Directors who speak for the shareholders and supposedly gave guidance to Mr. Wittig and Mr. Lake. Of course, with so many shares outstanding in this utility company, the individual shareholder has very little say in the running/ruining of the utility company. In fact, I believe currently the largest stockholders are mutual fund companies such as the one headquartered in Kansas City.
Speaking of the Kansas Gas Company, as I understand it, Western Resources formerly owned a portion or all of it. But in the process of following the KCC’s orders to reduce the massive debt of $3.6 billion run up by Wittig/Lake partially for gigantic losses by subsidiary, Protection One, Kansas Gas Service was sold to ONEOK utility company in Oklahoma. As a result, among other things, all of us ratepayers now have to pay two separate bills each month, bills which formerly tended to balance each other out over 12 months because of the nature of electricity and natural gas usage. Now ratepayers will get screwed by two companies rather than one. I’m also not sure if the State of Kansas regulator group, KCC, moniters the ONEOK/Kansas Gas service to protect Kansas ratepayers.
As usual, the situation is getting worse rather than better for the people who have to pay the bills.
Yes, you are correct about the Board and also KGS. KGS IS regulated by the KCC; however its situation is a lot different. It is not paying down a big gambling debt like Westar. However, since it is really a distribution company rather than an energy producer its ‘cost of gas’ is unpredictable.
What we are getting here is the result of a REALLY BAD DECISION to allow a lot of electrical generation using natural gas. This, in turn, has driven up the cost of gas (wholesale); we are now reaping the resulta of that bad decision. This was NOT a KGS decision but rather a national one. Gas should NOT be used for electricity generation except in rare circumstances.
As for shareholders being mutual funds it is then their fiduciary responsibility to provide oversight. My comment about ’shareholders approval’ is in reference to their choosing to elect Board members who in turn allowed this to happen. There were numerous elections in which shareholders made the decision to endorse Protection One etc.
CALPERS has been a leader in pushing responsibility by corporations it owns. KPERS and others need to follow suit.
Ben Huie: Your comments above are very informative. I have wondered why power plants are allowed to use natural gas to produce electricity but this is the first time I have seen it questioned. Obviously, the competition to use natural gas in power plants drives up the cost of residential usage of natural gas. Power plants should be restricted to coal and/or nuclear energy. Or change all residential customers to all-electric heating somehow. But the current system pits electric consumers against themselves in an under-the-counter, out of view price war that is hugely detrimental to all consumers.
Ben Huie: Your comments above are very informative. I have wondered why power plants are allowed to use natural gas to produce electricity but this is the first time I have seen it questioned. Obviously, the competition to use natural gas in power plants drives up the cost of residential usage of natural gas. Power plants should be restricted to coal and/or nuclear energy. Or change all residential customers to all-electric heating somehow. But the current system pits electric consumers against themselves in an under-the-counter, out of view price war that is hugely detrimental to all consumers.