The Missouri Public Service Commission has determined that KCP&L-Greater Missouri Operations Company (KCP&L-GMO) should be granted an electric rate increase of approximately $59.4 million to reflect the company's increased costs of providing service to its customers. The rate increase largely reflects the addition of the Iatan 2 coal-fired power plant. The Commission's vote was 5-0.
As part of its decision, the Commission reduced KCP&L-GMO's return on equity (ROE), or profit margin, to 10 percent. In this rate case, KCP&L-GMO sought an ROE of 11 percent when it filed its rate request on June 4, 2010.
When KCP&L-GMO filed its rate request with the Public Service Commission on June 4, 2010, it sought to increase annual electric operating revenues by approximately $97.9 million.
In its filing, KCP&L-GMO 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, the Jeffrey Energy Center and the addition of the Crossroads Energy Center to its generation fleet; costs related to various transmission and infrastructure projects designed to maintain system reliability; and increased non-fuel operating costs.
Under the Commission's decision, the PSC staff estimates that a residential customer using1,130 kWh per month in the summer and 780 kWh per month in the winter will see an average increase of $5.88 per month or an average monthly bill of $103.54 in the MPS service territory and an average increase of $16.97 per month or an average monthly bill of $98.97 in the L&P service territory.
As part of the Commission's decision in this case, fuel-related costs currently recovered through GMO's Fuel Adjustment Clause (FAC) will be rolled into GMO's base rates (known as rebasing). In addition, the Commission determined it is in the long-term best interest of the company's L&P service territory customers to take a larger share of Iatan 2 as an upfront cost, thereby avoiding some fuel costs and some capacity charges and giving those customers, lower-cost baseload generation for the long term. The Commission's decision also took into account that L&P's baseload capacity will be reduced by 100 MW when a purchased power agreement with the Nebraska Public Power District ends on May 31, 2011.
In its decision, the Commission allowed the Crossroads Energy Center into KCP&L-GMO's rate base. But for ratemaking purposes, only the fair market value ($61.8 million) of the Clarksdale, Mississippi power plant will go into rate base and not the net book value of $104 million sought by the company. However, the Commission determined it was not just and reasonable to require ratepayers to pay for the added transmission costs to receive in Kansas City, power from a plant over 500 miles away. The Commission determined that the excessive cost of transmission will be disallowed in customer rates and will also not be recovered through the company's FAC.
The Commission's decision continues various KCP&L-GMO demand side management programs designed to give customers more control over their energy bills. In addition, the decision continues the company's low income weatherization program and the Economic Relief Pilot Program (ERPP) which is designed to help low-income customers with their electric bills.
KCP&L-GMO serves approximately 311,000 electric customers in northwestern and western Missouri.
As part of its decision, the Commission reduced KCP&L-GMO's return on equity (ROE), or profit margin, to 10 percent. In this rate case, KCP&L-GMO sought an ROE of 11 percent when it filed its rate request on June 4, 2010.
When KCP&L-GMO filed its rate request with the Public Service Commission on June 4, 2010, it sought to increase annual electric operating revenues by approximately $97.9 million.
In its filing, KCP&L-GMO 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, the Jeffrey Energy Center and the addition of the Crossroads Energy Center to its generation fleet; costs related to various transmission and infrastructure projects designed to maintain system reliability; and increased non-fuel operating costs.
Under the Commission's decision, the PSC staff estimates that a residential customer using1,130 kWh per month in the summer and 780 kWh per month in the winter will see an average increase of $5.88 per month or an average monthly bill of $103.54 in the MPS service territory and an average increase of $16.97 per month or an average monthly bill of $98.97 in the L&P service territory.
As part of the Commission's decision in this case, fuel-related costs currently recovered through GMO's Fuel Adjustment Clause (FAC) will be rolled into GMO's base rates (known as rebasing). In addition, the Commission determined it is in the long-term best interest of the company's L&P service territory customers to take a larger share of Iatan 2 as an upfront cost, thereby avoiding some fuel costs and some capacity charges and giving those customers, lower-cost baseload generation for the long term. The Commission's decision also took into account that L&P's baseload capacity will be reduced by 100 MW when a purchased power agreement with the Nebraska Public Power District ends on May 31, 2011.
In its decision, the Commission allowed the Crossroads Energy Center into KCP&L-GMO's rate base. But for ratemaking purposes, only the fair market value ($61.8 million) of the Clarksdale, Mississippi power plant will go into rate base and not the net book value of $104 million sought by the company. However, the Commission determined it was not just and reasonable to require ratepayers to pay for the added transmission costs to receive in Kansas City, power from a plant over 500 miles away. The Commission determined that the excessive cost of transmission will be disallowed in customer rates and will also not be recovered through the company's FAC.
The Commission's decision continues various KCP&L-GMO demand side management programs designed to give customers more control over their energy bills. In addition, the decision continues the company's low income weatherization program and the Economic Relief Pilot Program (ERPP) which is designed to help low-income customers with their electric bills.
KCP&L-GMO serves approximately 311,000 electric customers in northwestern and western Missouri.
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