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A watchdog group is asking that all three members of the Kansas Corporation Commission be recused from hearing Westar’s wind energy request, citing a meeting nearly a year ago in which the governor’s office reportedly promised the CEOs of several utilities that KCC would ensure their companies would be fully compensated for investments in wind.
The meeting was detailed in a confidential e-mail sent by Westar’s CEO and was later obtained by the Citizens’ Utility Ratepayer Board.
Joe Harkins, who was at the meeting and is now a KCC commissioner, voluntarily recused himself from the case on Nov. 9. A week later, CURB formally asked that the two remaining members, Michael Moffet and Thomas Wright, be disqualified also.
Three days of evidentiary hearings are scheduled to begin in the case Dec. 3.
The case involves Westar’s plans to add 500 MW of wind to its energy portfolio. On Oct. 1, it asked the KCC to approve its proposal for acquiring the wind energy. Westar is asking that it be allowed 1 percent greater profit on its investment than is ordinarily granted. Electric rates for Westar customers would be raised by 0.15 to 0.26 cents per kilowatt hour.
CURB explains in its filing that, in response to a request that Westar supply information on any meetings the company had with the governor’s office between July 2006 and October 2007, Westar supplied a copy of an e-mail sent Dec. 21, 2006, by then-CEO James Haines to several Westar executives.
It described a meeting Dec. 18 involving the CEOs from Empire District Electric, Kansas City Power and Light, Kansas Electric Power Cooperative, Sunflower Electric, Midwest Energy and Westar. The meeting, requested by Gov. Kathleen Sebelius, was also attended by Lt. Gov. Mark Parkinson and Joe Harkins, who at the time was a special assistant and energy advisor to the governor.
“The governor recognized that, for some companies, in the short run adding wind will increase cost,” Haines wrote in his e-mail. “She further recognized that, historically, the rate making standard in the KCC has emphasized the lowest cost means to satisfy load. She indicated that the policy initiative will address this historical practice and will change it so that companies that commit to wind will be fully compensated.”
Haines said the CEOs were asked for a commitment.
“At the end of the meeting, the lieutenant governor asked each CEO to commit,” Haines wrote. “I said that with the assurances that were made re(garding) cost recovery that Westar would do its share, as did the other CEOs for their companies.”
CURB, in its filing, wondered just how such assurances could be made.
“(CURB’s) concern arises from the fact that no statute in Kansas specifically assures cost recovery for wind acquisitions in KCC proceedings,” the group wrote. “From a practical standpoint, the governor is simply unable to give assurances with regard to the outcome of any ratemaking issue or practice at the KCC without specifically directing and/or obtaining the agreement of at least two commissioners (a majority of the commission).”
Five months after the meeting – in May – Sebelius appointed Wright to replace KCC Chairman Brian Moline. Wright was a former law partner of Gary Sebelius, the governor’s husband, and had represented Westar in prior litigation.
In July, she appointed Harkins to fill the seat Bob Krehbiel had vacated on the KCC.
Testimony filed in the Westar wind energy case questions Westar’s projections for the wind farms it proposes to build, arguing that it is overestimating the amount of electricity the turbines will deliver and underestimating the cost of maintaining them.
Westar plans to acquire 500 MW of wind energy by 2010, but, in the rate case, asked the KCC to examine its plans for the first 295 MW. The utility has contracted to buy 146 MW at a rate of 4.08 cents per kWH, and proposes to have an ownership interest in the generation of another 149 MW.
Andrea Crane, a consultant hired by CURB, testified that electricity from Westar-owned generation will cost 14 percent more than power it purchases. While she argued that there may well be sound public policy reasons for adopting renewable energy resources even when they cost more, in this case, the primary beneficiaries are Westar’s stockholders.
“Westar has a direct financial incentive to own wind generation rather than acquiring the wind generation through a (power purchase agreement),” she testified.
By Duane Schrag
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