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Energy investments - Not risk-free; Wind power has potential, but ratepayers shouldn't bear entire weight of developing it

Let's face it: Most homeowners don't buy wind generators or solar energy systems simply for environmental reasons. They make the investments because they're banking on a payoff in the form of lower energy costs. Westar Energy is no different in wanting a bang for its green-energy bucks, which is why it's seeking a rate increase to support an $830 million wind energy project. But just how much of a payoff should Westar receive? And at what risk? ...To some extent, it's reasonable to place the cost of wind power on the shoulders of ratepayers. After all, wind could provide Kansans with an abundant, environmentally friendly energy source to offset the cost of fossil fuels. Westar and its stockholders should be given the chance to obtain a fair return on the company's investment. At the same time, though, the company bears a responsibility for keeping cost increases to a minimum for its customers.

Let's face it: Most homeowners don't buy wind generators or solar energy systems simply for environmental reasons.

They make the investments because they're banking on a payoff in the form of lower energy costs.

Westar Energy is no different in wanting a bang for its green-energy bucks, which is why it's seeking a rate increase to support an $830 million wind energy project.

But just how much of a payoff should Westar receive? And at what risk?

Those are the questions at the heart of hearings under way this week to determine how Westar would recover an investment in the wind project, which would add about 300 megawatts of wind-generated power to the company's energy system.

In seeking the rate increase, Westar is facing opposition from the Citizens' Utility Ratepayer Board, a state consumer protection group that believes the utility is seeking too much of a profit cushion to develop wind power.

As the hearings got under way, the lines appeared to be well-drawn.

Westar said it would drop its wind energy plans if state regulators try to force the company to swallow a smaller profit margin than it has requested.

CURB says the amount of extra profit being requested by the company is... more [truncated due to possible copyright]  

Let's face it: Most homeowners don't buy wind generators or solar energy systems simply for environmental reasons.

They make the investments because they're banking on a payoff in the form of lower energy costs.

Westar Energy is no different in wanting a bang for its green-energy bucks, which is why it's seeking a rate increase to support an $830 million wind energy project.

But just how much of a payoff should Westar receive? And at what risk?

Those are the questions at the heart of hearings under way this week to determine how Westar would recover an investment in the wind project, which would add about 300 megawatts of wind-generated power to the company's energy system.

In seeking the rate increase, Westar is facing opposition from the Citizens' Utility Ratepayer Board, a state consumer protection group that believes the utility is seeking too much of a profit cushion to develop wind power.

As the hearings got under way, the lines appeared to be well-drawn.

Westar said it would drop its wind energy plans if state regulators try to force the company to swallow a smaller profit margin than it has requested.

CURB says the amount of extra profit being requested by the company is unacceptable and needs to be eliminated or reduced. According to the group, the margin being sought by the company would cost ratepayers about $50 million over the next 20 years.

Westar said the project would result in an average rate increase of $2 to $2.50 a month in its early years, while CURB says the extra monthly cost could be close to $4.

Under state law, the KCC can grant extra profit potential for utilities planning investments in conservation and alternative energy initiatives. But CURB said Westar's profit request is 1percent higher than the amount normally granted to cover the risk of green energy investments.

The profit margin isn't the only point of contention in the issue. Westar opposes a plan by the Kansas Corporation Commission that would establish financial incentives and disincentives based on the level of wind energy production. The company said the plan was unfair because it could leave Westar at the mercy of the weather.

Also at issue is a CURB proposal calling for Westar to buy its wind power from developers of wind farms as opposed to building and operating its own facilities. The company is seeking a 50-50 split, but CURB says that approach will be 14 percent more expensive.

With the hearings scheduled to continue today, here's hoping the main objective of both sides is to find a way to keep wind energy development on track.

To some extent, it's reasonable to place the cost of wind power on the shoulders of ratepayers. After all, wind could provide Kansans with an abundant, environmentally friendly energy source to offset the cost of fossil fuels.

Westar and its stockholders should be given the chance to obtain a fair return on the company's investment. At the same time, though, the company bears a responsibility for keeping cost increases to a minimum for its customers.

 


Source: http://www.cjonline.com/sto...

DEC 5 2007
http://www.windaction.org/posts/12262-energy-investments-not-risk-free-wind-power-has-potential-but-ratepayers-shouldn-t-bear-entire-weight-of-developing-it
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