The Missouri Public Service Commission on Wednesday unanimously approved a 12.3 percent rate increase for Kansas City Power & Light customers in the St. Joseph area.
Kevin Kelly, a spokesman for the PSC, said the percentage increase affects all of the utility’s customers — residential and commercial combined — in the former St. Joseph Light & Power service territory.
Based on a residential customer using 1,150 kilowatts an hour in the summer and 760 kilowatts per hour in the winter, the increase will amount to an additional $12.91 per monthly bills, Mr. Kelly said. The commission granted $21 million of the $25.2 million sought by the original filing.
The new rates are expected to become effective later this month, based on negotiations between KCP&L and the state.
Commission Chairman Kevin Gunn said the decision marks a transition toward an electric system founded on energy efficiency and resources to help empower consumers in controlling their individual usage and costs.
“The biggest piece of this is that we had all parties in the case agree to implementing energy efficiency programs,” he said. “That’s probably the biggest chunk of the increase.”
In November, the commission approved KCP&L’s involvement in the Missouri Energy Efficiency Investment Act, which promotes cost-savings programs oriented to consumers. Sen. Brad Lager, R-Savannah, sponsored the measure.
Utility spokeswoman Katie McDonald said a series of energy efficiency measures are currently under development and will be available to customers later in the year. As part of the case, the commission approved an agreement to continue an economic relief pilot program aimed at helping low-income customers with their bills.
The commission chose to cap the company’s return-on-equity rate for its investments at 9.7 percent, rather than the 10.4 percent sought by the request as a way of attracting investors. Mr. Gunn said the national average for utilities’ return on equity is about 10 percent.
“We felt like a reduction in that was appropriate,” Mr. Gunn said, adding that the ratio represented a “huge dollar issue.”
A request by KCP&L to increase fixed charges for customers was denied.
“We don’t want to dis-incentivize people” from pursuing energy efficiency, Mr. Gunn said.
Ms. McDonald said KCP&L does not agree with all portions of the commission’s decision, including the rate of return on equity.
“We’re currently reviewing the order to understand its implications,” she said. “There are obviously costs of serving our customers that are not in the rate.”
She added that the utility is pleased the commission recognizes the importance of investing in a reliable electric system and paying for environmental upgrades.
There are no current plans by KCP&L to file a new rate case later this year, according to Ms. McDonald. She said the company’s rate requests have been smaller than would have been the case had the merger with Aquila not occurred in 2008.
In late February, KCP&L filed a $25.2 million case with the commission that sought to increase electric rates by 14.6 percent. The commission had up to 11 months from the filing to reach a decision.
A 2½-hour local public hearing was held Sept. 12 at City Hall, where most residents spoke in opposition to the request. Affordability was most often mentioned as the overriding issue among those who haven’t seen pay raises at their jobs or who are on fixed incomes.
Officials with the utility cited costs that have outpaced its ability to maintain current rates as justification for the case, along with a need to replace aging infrastructure.
In May 2011, the commission approved phased-in electric rate increases of slightly more than 21 percent for KCP&L’s St. Joseph service territory.
Formal hearings in the case were held in the fall in Jefferson City. Missouri Gas Energy and Ag Processing participated in the case as intervenors. Both firms have operations in St. Joseph.
There are approximately 66,000 customers in the former Light & Power service territory now operated by KCP&L.