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Kan. regulators conditionally approve $25M rate increase for Westar Energy

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Essential Energy Insights - February 2021

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Kan. regulators conditionally approve $25M rate increase for Westar Energy

TheKansas Corporation Commission on March 31 conditionally a request by to update itstransmission delivery charge, subject to refund and further review by theagency and its staff.

Thatupdate, which will cost retail ratepayers around an additional $25 million,will add approximately $4 to residential customer bills each month, startingApril 1, while average small business customers will a monthly decrease of about$31. Increases for midsize commercial customers and schools will be roughly 1%and 29%, respectively, and large scale commercial and industrial customers willsee an approximately 4% drop in their bills.

WestarEnergy filed an application in February seeking permission to recoveradditional electric transmission costs, the commission said in its order.

TheKCC said it will issuea report in May after its staff conducts an investigation to ensure that theutility's request is based on "actual costs and applicable laws."While the KCC said refunds will be issued if the charge is deemed to be "excessive,"the state regulator also noted that it is not authorized to alter the amount inthe request, which was set by FERC.

The transmission delivery charge is calculated based on theamount of demand, on average, the different customer classes place on thetransmission system over the year, the KCC said.

FERC also approved a settlement agreement negotiated betweenthe KCC and Westar Energy that will refund around $10 million to retailcustomers and save ratepayers roughly $8 million in transmission deliverycharges each year, according to the KCC. The KCC said it filed a complaint withthe agency in August 2014 over what it called an "unreasonably high"return on equity on transmission rates.

The parties agreed to a reduction in the base ROE from 10.8%to 9.8% and KCC staff will use the reduced ROE during the transmission deliverycharge increase audit.

The conditional approval for the increased transmission deliverycharge follows a $78.3 million net rate hike sanctioned by the KCC for Westar Energy in September2015.