The Kansas Corporation Commission denied Thursday a request from Westar Energy to increase retail electric rates by more than $90 million to cover the cost of buying a larger stake in the coal-fired Jeffrey Energy Center not required to meet the company's consumer demand.
Westar sought compensation for its seven-month lease and subsequent acquisition of 8% of the plant in St. Mary, which is west of Topeka. The cost to ratepayers would have been spread over 15 years and amounted to about $93 million.
Andrea Crane, representing Citizens' Utility Ratepayer Board, said there was no evidence to support Westar's decision to make the deal.
"There has been no showing that this capacity is needed or is likely to be needed in the near term," Crane said.
The commission's order indicated Westar failed to meet the burden of proving the lease-purchase contract was a prudent decision on behalf of customers. The KCC concluded the company entered into the business deal knowing it didn't require the 8% portion of the Jeffrey center to satisfy its capacity requirements and that the arrangement would result in higher utility rates for customers.
"Consumers should not pay for energy they do not need," the KCC's order said. "Customers do not benefit by paying for capacity and/or energy they are not reasonably expected to need."
The KCC said Westar had acknowledged it had sufficient energy capacity to serve customers through 2030 and that the new stake in the Jeffery plant was unlikely to become profitable.
Westar spokeswoman Gina Penzig said the company was reviewing the commission's 34-page order "to understand their decision."
In August, Westar decided to purchase the 8% share of the Jeffrey unit from Midwest Power Company. Westar and Kansas City Power & Light owned the other 92%. Westar and KCP&L merged last year into a company called Evergy to serve 1.6 million customers in Kansas and Missouri.
A KCC statement after the decision was issued pointed to the commission's oversight responsibility to balance "interests of the public and the utility while ensuring reliable and cost efficient service."