|
KCP&L erases a price break in Kansas
Feb 09, 2011 (The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) --
It's freezing outside, but thousands of Kansas heat-pump users are finding a new way to get hot: Looking at electricity bills that have gone up sharply.
The increases are doubly distressing because they're erasing a price break on electricity that was offered in the first place to encourage people to buy their heat pumps.
Kansas City Power & Light won a rate increase in Kansas last year that averaged 4.9 percent -- but amounted to at least 26 percent for most of the year for its 55,000 residential customers with electric heat.
Those rates took effect Dec. 1 and are showing up now on monthly bills.
"I was shocked," said Ryan Talley of Overland Park, who bought his heat pump two years ago and figured it would pay for itself in seven years. "The increase wasn't reasonable."
His calculations went out the window when he got a $262 monthly electric bill -- a bill he thought would be about $180. Some of the increase came from the recent extra-cold weather, but he figures the rate increase alone cost him $60.
That's a nasty surprise because many electric utilities traditionally have offered rate breaks to encourage people to use electric heat. The utilities have extra generating capacity in winter, away from summer's heavy air-conditioning demand, so it helps them to have more heating customers.
In Kansas, for example, KCP&L's electric-heat customers get the rate break for eight months of the year and pay the same as others during air-conditioning season.
Natural-gas utilities for years have called those lower rates an unfair subsidy that force other electricity customers to pay more.
Also unfair, some argue, is that Kansas electric-heat customers get the rate break on all of their electricity and not just what they use for heating.
Those arguments didn't do much good -- until last year's rate case. Then the staff of the Kansas Corporation Commission joined the gas utilities and said that the lower rates weren't covering KCP&L's costs for providing the electricity. The staff also said the cheaper rates weren't encouraging energy conservation, which had become a state priority.
State regulators approved a 26 percent rate increase for KCP&L's electric-heat customers for the first 1,000 kilowatt-hours of monthly electricity use. The rate for any consumption over that amount was raised 47 percent for those with electric heating.
Some of those customers have electric furnaces. But the vast majority use heat pumps that can transfer heat to a house from the outside air.
The rate increase eliminated most, but not all, of the electric-heat customers' rate advantage. But the rest could go away if the gas utilities and the commission's staff get their way in a future case that will take a comprehensive look at KCP&L's rates.
The utility said it would argue for returning to the previous rates, restoring the heating customers' full break.
"We will obviously see opposition and we may or may not prevail," said Curtis Blanc, senior director for regulation at KCP&L.
The issue has also popped up in Missouri, where regulators are considering whether to raise KCP&L rates. Missouri Gas Energy, which serves western Missouri and the Kansas City area, intervened in the case and sought to get the special rate for electric heating customers in the state discontinued.
Last week an agreement among KCP&L, Missouri Gas Energy and the Missouri Public Service Commission's staff would allow a 6 percent increase on the first 1,000 kilowatt-hours and no increase on any usage over that. In return, Missouri Gas Energy agreed not to seek elimination of the special rate.
Regulators have yet to decide whether to approve the agreement, but their staff says it appears sufficient to cover KCP&L's cost of service and its rate of return, important elements for regulators in deciding whether a rate is appropriate.
In Kansas, the KCP&L rate for all residential customers is 9.5 cents per kilowatt-hour for the four months that include summer. That drops to 7.3 cents in the winter for most customers. But those with electric heat had paid 5.2 cents for the first 1,000 kilowatt-hours each month and now must pay 6.6 cents. Their rate above 1,000 kilowatt-hours rose from 3.9 cents to 5.7 cents per kilowatt-hour.
Curbing the special rates has been a priority with the American Gas Association, a trade association of gas utilities, and utilities across the country have taken up the issue.
One consultant hired by Kansas Gas Service and Atmos Energy, area gas utilities, testified in the Kansas case that there had been much higher growth in all-electric customers in recent years, and that they had benefited from a "significant" subsidy from other KCP&L customers.
Gary Milligan, a sales manager for Atmos Energy in Olathe, said in a document filed with regulators that KCP&L had set up its rates unfairly and in some cases encouraged entire subdivisions to go to electric heating.
The Kansas commission's staff argued for doing away with the "distortionary" rates, though it acknowledged that could cause some short-term uncertainty and customer rate shock. But higher rates will encourage less electric usage, the staff said, which would eventually reduce the need for future power plants and large future rate increases.
To reach Steve Everly, call 816-234-4455 or send e-mail to severly@kcstar.com.
To see more of The Kansas City Star, or to subscribe to the newspaper, go to
http://www.kansascity.com. Copyright (c) 2011, The Kansas City Star, Mo.
Distributed by McClatchy-Tribune Information Services. For more information
about the content services offered by McClatchy-Tribune Information Services
(MCT), visit www.mctinfoservices.com.
[ Back To Smart Grid Home's Homepage ]
|