ChesserKansas City Power & Light Co. said Tuesday it had reached an agreement to raise annual rates in Missouri by $95 million, or $6.1 million less than it requested.
If approved by the Missouri Public Service Commission, the rates would go into effect Sept. 1. The increase would translate into an average annual hike for Missouri customers of about $151.20.
“A $95 million rate increase in today’s economy is going to be a huge blow to people, but it could have been worse and I think it’s a reasonable resolution of the case,” said Lewis Mills, head of the Missouri Office of Public Counsel, which represents the interests of the public and utility customers in rate proceedings.
KCP&L last increased rates for Missouri customers in January 2008, when they went up 6.5 percent. The $95 million would amount to an increase of about 16.4 percent.
Some of that increase will be backed out after KCP&L’s Iatan 2 plant, now under construction at an estimated cost of $1.9 billion, is up and running. The agreement Tuesday allows KCP&L to charge some of the plant’s costs upfront by amortizing them, which means that they are later deducted from the rates.
Tuesday’s agreement in principle affects the utility’s Missouri customers only. KCP&L is also seeking a rate increase for its Kansas customers. That matter is pending.
Besides granting KCP&L most of the rate hike it sought, the agreement allows regulators to challenge up to $30 million in costs for the utility’s Iatan 1 and 2 projects at KCP&L’s next rate case.
Iatan 1 is KCP&L’s coal-fired plant near Weston that is getting an environmental upgrade. KCP&L hopes to complete Iatan 2 no later than the summer of 2010.
KCP&L had warned that without the rate increase, its credit rating would be jeopardized. State utility regulators are supposed to approve rates in the public’s interest, but that includes ensuring a utility is on a sound financial footing so that it can provide safe and adequate electricity.
While characterizing the $95 million as “a bad number at a bad time,” Mills said regulators feared further delays in addressing the rate request would lead KCP&L to seek as much as a $130 million hike.
“We were concerned that if went to a hearing we’d get an even bigger increase than $95 million,” he said. “That’s one of the reasons we were concerned with locking this down, even though it’s a huge number.”
In a statement, Mike Chesser, chairman and chief executive of Great Plains Energy, KCP&L’s parent, said, “The settlement…today reflects the hard work and good faith of the parties. “We believe the agreement is a fair settlement for all the parties involved and we look forward to approval by the commission.”
KCP&L had argued that its rates in Missouri are 25 percent to 30 percent below the national average. It said that, even if the $95 million increase is approved, the rates will remain among the lowest in the country.
KCP&L has until the end of the business day Friday to file documents reflecting the agreement. Missouri Public Service Commissioners will likely meet in May to decide whether to give it final approval.
At least one group of commercial users opposes the rate hike. Attorney Jim Zakoura, who represents many of the major hospitals in Kansas City, including St. Luke’s and HCA-owned facilities, said the hospitals had no intention of signing onto the agreement.
“We do not say that Kansas City Power & Light has not spent the money on the things they said they spent it for. There’s really no dispute as to that,” he said. “The issue is that the estimated cost and the actual cost (for KCP&L’s comprehensive energy plan) are significantly different.”
When KCPL was KCPL, not Mike Chessers Great Plains Energy. KCPL was a well respected and needed part of the Kansas City Economy.
When Drue Jennings departed from the company that is when things started to go to hell.
If anyone would of googled Mike Chesser when KCPL announced he would be the new CEO they would of found very good reading from past employeres as well as past employees.
This guy was a dud from day one. I received some very good traning and certification while at KCPL That let me continue my career.
There were several 50 something white males with 30 + years experience. That were told they did not have the Chesser vision of the new company Great Plains energy. they agreed and left with a pretty good pension.
Then there were the Aquilla 50 + white males that as soon as they trained their new workmates on the Aquilla system were let go.
With the damage Mike Chesser has done to a once respected midwest utility. And the 16% rate increase that has been approved. Mike can get his bonus pay , stock options, pay increase the whole 9 yards.
In less than 6 years Mike Chesser has taken KCPL to the bottom of utilities of it's size.
It is time to run a very complete audit of KCPL/Greatplaines energy
For a few years after Cheeser arrived KCPL looked great on the books. They had record setting wholesale power sales.
This was not from anything Mike Chesser did, It was from the crew in place before his arrival.
Yes the economy turned bad last year, but not so bad that KCPL Bond rating would drop if they did not get the rate increase 16 %
KCPL / GREAT PLAINS ENERGY should have a complete audit of all finances. I do know if the federal government would do a complete audit it would show the real reason KCPL is in such poor relationship with other utlities and electric providers of it's size.
I hate to mention the name Madeoff !! but that is what the Chesser group did to your utility.
If anyone doesn't believe me, then make/ force Chesser to open all the books for all to audit.
I bet he will be on the next way out of KC he can find. He does have a place though. Prison !!! with ex westar golden boy.
I have more respect for Mark Funkhouser than will ever be deserved to Mike Chesser. The man that led KCPL to financial disaster. Also don't forget Bill Downey, he is like the George Bush Dick.
Nuf-said westdot
I know the grand jury will have plenty of blame to dish out ???