Thursday morning, the Kansas Corporation Commission denied Westar Energy’s request for ratepayers to bear the cost of its seven-month lease and subsequent purchase in August 2019 of an 8% interest in Jeffrey Energy Center (JEC). Had it been approved, the cost to ratepayers would have amounted to approximately $93 million in increased rates over the next 15 years.
In rejecting the request, the Commission order states Westar failed to meet its burden of showing that its new lease and purchase agreement was a prudent decision for its retail customers and that Westar entered into the agreement knowing it did not need the 8% portion of JEC to satisfy its capacity requirements and the settlement agreement would increase customers’ rates.
Prior to the August purchase, Westar and Kansas City Power & Light owned 92% of the Jeffrey Energy Center (JEC). Midwest Power Company owned the remaining 8% and leased it to Westar. The power generated was sold to Mid-Kansas Electric Company through a Power Purchase Agreement. The lease and purchase agreements both expired on January 3, 2019. Westar then opted for a new lease and subsequent purchase of the 8% and asked the Commission to approve the recovery of costs through its Retail Energy Cost Adjustment (RECA) which is included in customer rates.
Today’s order does allow Westar to operate the 8% portion of JEC for wholesale sales and retain revenues resulting from that portion of the plant for their shareholders.
The Commission’s regulatory oversight requires balancing the interests of the public and the utility while ensuring reliable and cost efficient service.