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Law's intent at crux of hearings
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Regulators want lawyers to learn what lawmakers intended in a 1978 law that allows utilities extra profit when they develop renewable energy.
What you pay for wind power in the future could hinge on what the state Legislature intended when it passed a law during the Carter Administration to encourage development of alternative energy sources.
On Tuesday, the chairman of the Kansas Corporation Commission directed parties in a Westar Energy wind-power case to research the intent behind a 1978 law that allows the commission to grant 0.5 percent to 2 percent in extra profit potential to utilities developing renewable energy.
KCC Chairman Thomas Wright suggested the intent might have been to offer utilities “a little bit of sugar to help that all go down.”
The law was passed in the wake of an energy crisis that saw Americans struggling to heat their homes and waiting hours in line to buy gasoline.
Wright said the law was apparently changed since it passed, but he did not elaborate and said he did not know when or why the law was amended.
He directed lawyers in the Westar case to come prepared to discuss that when they make their closing arguments today.
Westar’s request for an extra percentage point of profit on wind has emerged as a key issue in the commission’s consideration of how to compensate the company for the planned addition of 300 megawatts of wind power to its system, which serves 674,000 Kansas customers.
Overall, adding that much wind power – about enough to serve 90,000 homes – is expected to cost customers about $830 million over the next 20 years.
On Monday, Westar chief executive Bill Moore testified the company would severely curtail or scrap its wind plan if the KCC doesn’t grant the extra profit potential.
The Citizens’ Utility Ratepayer Board – the state agency that represents residential and small-business utility consumers – has estimated that about $50 million of the cost to customers would be increased profit for Westar shareholders.
Tuesday, a CURB consultant testified that she doesn’t think it’s justified.
“I’m concerned nobody’s looking out for ratepayers who are going to have to pay the bills for this,” said Andrea Crane.
Crane testified that she didn’t know what state lawmakers had in mind in 1978, saying she was in college at the time.
“Who knows what the intent of this statute was 30 years ago?” she said.
She said wind power now is the rage as government as businesses scramble to reduce carbon emissions to fight global climate change.
“Why in the world do you want to provide that ‘sugar’ to shareholders?” she said in reference to Wright’s comment.
Several Westar witnesses testified they want to get windmills on the ground now to take advantage of tax credits that will expire at the end of 2008.
They also said they are concerned Congress will soon pass a “carbon tax” that would increase future costs for energy generation using fossil fuels.
By Dion Lefler
5 December 2007
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