The Kansas Corporation Commission (KCC) approved Westar Energy’s request (Docket No. 16-WSEE-375-TAR) on March 31 to update the Transmission Delivery Charge (TDC) it imposes on 690,000 residential, commercial, and industrial customers in the Sunflower State.
However, the approval is subject to refund, should an investigation by KCC staff determine the increase to be excessive – and a ruling by the Federal Energy Regulatory Commission (FERC) last month also may contribute to lower costs later this year.
TDC charges appear as a separate line item on customers’ bills. The $25 million request approved will raise the TDC charge about $4 per month for residential customers, while cutting the average small-business bill by about $31.
According to a report in the Wichita Eagle, midsize businesses would see about a 1 percent increase in their transmission rate, while the largest commercial and industrial customers would get a 4 percent cut. Schools are proposed to get a 29 percent increase.
The KCC staff audits TDCs to ensure that Westar’s request is based on actual costs and applicable laws. The KCC cannot, however, alter the amount in the request. The rate for transmission services is set by the Federal Energy Regulatory Commission (FERC).
The new charges were scheduled to take effect April 1. The KCC staff report is expected in May, with the commission issuing a final determination later this year.
The TDC is calculated by how much demand, on average, different customer classes place on the transmission system over the year. It is measured by looking at the peak demand for each particular month (highest hour kW usage) and then analyzing how much of that demand was contributed by each customer class. This produces 12 percentage figures, one for each month, of the amount of demand each class placed on the system during those time frames.
The 12 Coincident Peak allocation is the average of each of those 12 monthly calculations. In accordance with Westar’s TDC tariff, Westar must update this allocation between classes after every full rate case, or at least every five years.
In a related development, on March 8, FERC approved a settlement agreement negotiated between the KCC and Westar Energy that will refund approximately $10 million to retail customers and save ratepayers approximately $8 million annually in transmission delivery charges.
The KCC had filed a complaint (Docket Number EL14-93-000) with FERC on August 20, 2014, alleging Westar’s return on equity (ROE) on transmission line rates was unreasonably high. The KCC and Westar subsequently reached a settlement agreement to reduce the base ROE from 10.8 percent to 9.8 percent.
KCC staff planned to use the reduced ROE during the auditing process of the $25 million TDC increase starting April 1.