The Kansas Corporation Commission (KCC) has approved Westar Energy's proposal to own 149 MW of wind generation and to enter into purchased power agreements (PPAs) to purchase 146 MW of wind generation. In its application, Westar asked the KCC to determine the rate-making principles and treatment that would be used in a future rate case.
The actual cost to construct the wind farms – up to $282 million – will be allowed in rates after the wind generation is providing service to Westar customers. Any costs in excess of $282 million will be subject to further review by the KCC.
Also, Westar will be allowed to recover costs associated with the PPAs through Westar's retail electric cost adjustment. These costs also will not be passed on to customers until electric service is being provided through the PPAs. The KCC rejected an additional 1% rate of return that was requested by Westar.
The KCC further determined an incentive mechanism to maximize wind energy output is not necessary at this time, but will revisit the issue in two years. The KCC will continue to review the prudence of Westar's operations and maintenance of its wind assets and to make appropriate financial adjustments if the company has not operated or maintained its wind facilities appropriately.