News Release
December 27, 2007
Rate Treatment Decided For Westar's Wind Generation
The Kansas Corporation Commission (KCC) today issued an order finding Westar's proposal to own 149 MW of wind generation and to enter into purchased power agreements (PPAs) to purchase 146 MW of wind generation is prudent. In its application, Westar asked the Commission to determine the ratemaking principles and treatment that would be used in a future rate case.
The actual cost to construct the wind farms, up to $282 million, to be owned by Westar, will be allowed in rates after the wind generation is providing service to Westar customers. Any costs in excess of $282 million will be subject to further review by the Commission.
Also, Westar will be allowed to recover costs associated with the two PPAs through Westar's RECA (Retail Electric Cost Adjustment). These costs also will not be passed on to customers until electric service is being provided through the PPAs.
The Commission declined to approve an additional 1 percent rate of return that was requested by Westar. In its order, the Commission concluded the circumstances in this case do not justify allocating to ratepayers the cost of an additional return in light of the uncertainties inherent in wind generation and the narrow margins as to whether PPAs or ownership is more costly.
The Commission further determined an incentive mechanism to maximize wind energy output is not necessary at this time, but will revisit the issue in two years. The Commission will continue to review the prudence of Westar's operations and maintenance of its wind assets and to make appropriate financial adjustment if the company has not operated or maintained its wind facilities appropriately.
The Commission also will open a general investigation to allow KCC staff, utilities, developers, and other interested parties to gather information on the wind generation industry and to investigate wind generation data reporting. The Commission will use this investigation to set performance metrics and determine what information is needed to evaluate wind generation performance.
Docket No. 08-WSEE-309-PRE