Empire District Electric Files in Missouri for Higher Base Rate, Lower Fuel Fee
The Empire District Electric Company – an investor-owned utility based in Joplin, Missouri – has filed requests with the Missouri Public Service Commission (MPSC) to increase base rates, and to modify the fuel adjustment charges, paid by its Missouri electric customers.
The utility is seeking an annual increase in base rate revenues of approximately $33.4 million, or about 7.3 percent. If approved by the MPSC, a residential customer using 1,000 kilowatt hours (KWh) would see a monthly increase of about $12.54.
The most significant factor driving the rate request, according to Empire, is the cost associated with the conversion of the Riverton (Kansas) Unit 12 natural gas combustion turbine to combined cycle operation. The conversion replaces the production capacity of retiring coal-fired generators at Riverton and carries a cost of between $165 million and $175 million. Scheduled to be completed in early to mid-2016, the project consists of a new heat recovery steam generator, steam turbine generator, auxiliary boiler, cooling tower, and other balance of plant equipment. The conversion was necessary to comply with Mercury Air Toxics Standards (MATS) mandated by the Environmental Protection Agency.
The company also listed a number of other contributing factors in the case, including increased transmission expenses, administrative and maintenance expenses, and costs incurred as a result of a mandated solar rebate program. In addition, the request reflects cost-savings for customers resulting from revised depreciation rates and lower average interest costs.
In the coming months, the MPSC will perform an audit of Empire’s operations, hold public hearings, and conduct an evidentiary hearing. Any new rates granted would take effect at the conclusion of this process – typically in 11 months, or by late-summer 2016.
In this same filing, Empire asked to continue the use of the Fuel Adjustment Clause (FAC). The FAC provides for semi-annual adjustments to customers’ bills, based on the varying costs of fuel and purchased power used to serve customers. The proposed FAC adjustment for the semi-annual period beginning December 1, coupled with adjustments reflected on customers’ bills over the previous 12 months, will result in a cumulative monthly reduction of $3.46 for a customer using 1,000 kilowatt hours.
In making the announcement, Empire CEO Brad Beecher stated, “The Riverton Combined Cycle Unit was the most economic option to replace the coal units at Riverton and comply with MATS. This new configuration captures the exhaust heat from the existing natural gas unit and uses it to power a new steam turbine. This highly efficient process will help us hold down fuel costs for customers while lowering emissions and protecting the environment.”
A corresponding filing also will be made with the Oklahoma Corporation Commission (OCC) using the Missouri proposed tariffs. An administrative rule providing rate reciprocity to any electric company that serves less than 10 percent of its total customers within Oklahoma took effect in August 2015. The rule is intended to provide cost savings for customers related to rate case expenditures. As a result, future PSC approved increases in Missouri rates will be effective for Empire’s Oklahoma customers subject to approval of the Oklahoma Corporation Commission (OCC).
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