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Westar seeks reward for wind investment

An attorney for Kansas consumers continued to argue Wednesday that Westar Energy didn’t need $50 million in additional profit simply for investing in wind energy during the next 20 years.

“Westar’s one of the last regulated utilities in the state to step forward and invest in wind energy, and they want a prize,” David Springe of the Citizens Utility Ratepayer Board told the Kansas Corporation Commission in a final day of testimony in Westar’s wind energy case.

“We do support wind. It might sound like we don’t. That’s anything but the truth,” Springe said. “But other utilities will want the same treatment that Westar receives.”

An attorney for the Topeka-based utility however, reminded the regulatory board the company wouldn’t invest nearly as much in wind farms without assurance of an extra percentage point of profit.

“We believe our proposal should be approved without conditions,” said attorney Martin Bregman.

The KCC has taken the unusual step of agreeing to a speedy ruling by Dec. 31.

Westar plans to own half the turbines it needs to produce its initial investment of 300 megawatts. The other half will be purchased through agreements with other wind energy companies.

The cost to the average ratepayer will be about $2.50 per monthly bill.

Bregman argued the company’s rates are the lowest in Kansas and well below the national average. They expect rates to continue to compare favorably.

A dispute in the case is whether it’s more prudent for Westar to own the wind generators or buy the power from others.

CURB argued the risk of owning was greater for ratepayers than acquiring through a purchase agreement.

But Westar chief executive officer Bill Moore said earlier this week the company would split its approach and learn over time which proved a better deal.

Bregman said through ownership of turbines, Westar eventually will own some of the best wind sites in the state.

“It’s a case we can support,” Jim Zakoura, an attorney representing industrial customers, testified Wednesday. “We do believe it’s appropriate for Westar to add wind generation to its portfolio. We wish they’d done it earlier because the cost has increased in the last two years.”

A representative of a second utility at the hearing told commissioners a 1978 Kansas law gives regulators the power to grant incentives for renewable investments. That meant the commission could allow companies to make a half percent up to 2 percent in additional profit for their investment.

A few years later, the Legislature amended the law to allow similar monetary incentives for energy efficiency investments.

The legislation came in the late 1970s and 1980 when energy use was climbing, new coal plants were in the plans, fuel shortages were a concern along with tensions in the Middle East.

“It was similar to the scenario today,” said Jim Flaherty, an attorney for Empire District Electric Co. based in Joplin, Mo.

The company, which has 10,000 customers in southeast Kansas, purchases some of its energy from the Elk River Wind Farm in Butler County and plans to purchase more from a wind farm now under construction in Cloud County.

Any form of energy that doesn’t emit carbon dioxide is a benefit to future customers, Flaherty said in supporting Westar’s bid.

Westar is the state’s largest electric company with 674,000 customers in much of east and central Kansas. It plans to eventually invest in up to 500 megawatts of wind power, which will more than double the state’s total wind generation.

The utility says it is eager to start turbine construction in order to qualify for a 10-year federal production tax credit. The credit’s sign-up period expires at the end of 2008.

By Sarah Kessinger

Harris News Service

Hays Daily News

5 December 2007