Western wants to change its capital structure so that it appears to have less debt, said Walker Hendrix, chief counsel for the Citizens Utility Ratepayers Board, a state watchdog agency. Doing so would increase Western's tax liability, which it wants to pass off on ratepayers, he said. Western wants to increase its allowed rate of return from 10.75 percent to 12.75 percent. It's based on prices as of Nov. 17, which were abnormally high. Mr. Hendrix of CURB contends, for example, that Western isn't allocating enough of its overhead costs to its wholesale electric business or its unrelated operations.
Western officials disagree that the company is over-earning.
The case is also complicated by Western's plans to sell KGE and KPL to Public Service Company of New Mexico, though that should have no bearing on the setting of electric rates. That's up to the Kansas Corporation Commission, which oversees utilities in the state. It isn't expected to make a final decision until midsummer.