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MO Public Service Commission Has Determined...
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MO Public Service Commission Has Determined KCP&L Should Be Granted Rate Increase
April 14, 2011
The Missouri Public Service Commission has determined that Kansas City Power & Light Company (KCP&L) should be granted an electric rate increase of approximately $34.8 million to reflect the company's increased costs of providing service to its customers. The rate increase, which was approved by the Commission in a vote of 5-0, largely reflects the addition of the Iatan 2 coal-fired power plant to KCP&L's energy portfolio. The Commission's decision is detailed in a 183 page order.
When KCP&L filed its rate request with the Public Service Commission on June 4, 2010, it sought to increase annual electric operating revenues by approximately $92.1 million.
In its filing, KCP&L stated the primary reason for the rate request was the addition of the Iatan 2 power plant. In addition, the rate request reflected costs related to environmental upgrades at the Iatan 1 power plant; costs related to various transmission and infrastructure projects designed to maintain system reliability; costs related to renewable energy projects such as wind and solar; and increased costs associated with the transportation of coal to several of KCP&L's power plants.
Under the Commission's decision, the PSC staff estimates that a residential customer using 1,130 kWh per month in the summer and 780 kWh per month in the winter will see an average increase of $4.85 (5.23%) per month.
As part of its decision, the Commission reduced KCP&L's return on equity (ROE), or profit margin, to 10 percent (down from the 10.75 percent awarded in the company's last contested rate case which took effect in January 2008). In this rate case, KCP&L sought an ROE of 11 percent when it filed its rate request on June 4, 2010.
The Commission's decision continues various KCP&L demand side management programs designed to give customers more control over their energy bills. The decision also includes continued funding of a low income weatherization program.
This is the fourth rate increase associated with a 2005 agreement which established an experimental regulatory plan (Comprehensive Energy Plan) which detailed the supply, delivery and pricing of electric service to be provided by KCP&L into the future. The experimental regulatory plan included environmental upgrades to a number of KCP&L's existing power plants, wind generation, construction of a new coal-fired power plant (Iatan 2) and various customer programs designed to conserve energy.
This decision marks the end of KCP&L's regulatory plan for construction of major new generation plant and needed plant upgrades that will provide its customers with power for years to come. The plan, which called for the phase-in of rate increases, was designed to ease customer rate shock when Iatan 2 began generating power, preserve KCP&L's sound credit rating, and allow KCP&L to obtain more favorable financing terms for the project lessening costs ultimately paid by its ratepayers.
Kansas City Power & Light Company serves approximately 509,000 electric customers in western Missouri including the Kansas City area.
Case No. ER-2010-0355
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