The Joplin Globe, Joplin, MO

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July 6, 2012

Empire District Electric Co. to seek rate increase in Missouri

The Empire District Electric Co. on Friday announced that it will seek a rate increase to recover costs of $30.7 million associated with the May 22, 2011, tornado and other operational issues.

The company will seek interim relief of $6.2 million in connection with the tornado. Instead of waiting 11 months, the Missouri Public Service Commission will be asked to grant the rate increase on an emergency basis.

The company, in a press release, characterized the impact for a  Missouri customer using 1,000 kilowatt-hours of electricity a month as a monthly net increase of $6.60. Company officials say a fuel cost reduction that became effective June 1 reduced the monthly bill of the same customer by about $6.   

Brad Beecher, president of the company, said, “We are asking the commission to implement the $6.2 million portion of the case related to tornado recovery costs and post-tornado cost of service through interim rates to take effect in 30 days.’’

A company spokesman said the commission has “a high standard’’ for granting such relief, but might consider it in this case in light of the impact the tornado had on the company’s operational and maintenance expenses, and capital costs.

Any permanent rates approved by the commission would not be effective until June 2013.

Beecher, in a recent interview, said the company’s shareholders bore the brunt of the initial post-tornado recovery when the company, for the first time in its history, suspended its dividend. The dividend was restored by the company’s board in February for shareholders of record on March 1.

The company had some insurance to cover tornado-related losses, including $6.5 million in coverage for the substation at 26th Street and Moffet Avenue. That included 1,000 feet of transmission lines.

In addition to the tornado, other factors are involved in the rate request.

Amy Bass, spokeswoman for the company, said Empire is seeking relief for its share of costs associated with the addition of new transmission lines within the Southwest Power Pool that will allow more energy from wind farms in remote locations to flow to cities where the power is needed. As a member of the pool, Empire has been allocated a portion of the costs for these new lines though the vast majority of the lines will have no impact on Empire.

In response to new U.S. Environmental Protection Agency standards for mercury emissions related to coal-fired plants, Empire will seek changes in its existing depreciation rates to recover expenses associated with the retirement of units 7 and 8 at the company’s plant in Riverton, Kan.

Bass said the company is installing new computer systems for accounting, customer service and operational purposes. The capital and operating costs associated with the systems are included in the rate request. Bass said the new systems are required to replace existing systems that are at the end of their useful lives and for which vendor support is no longer offered.

The company also is hoping to recover costs associated with vegetation management, which is now governed by rules established by the commission. Empire is required to inspect and clear vegetation every four years in urban areas and every six years in rural areas. Because of the new rules, outages resulting from vegetation in primary distribution lines have decreased by more than 63 percent since 2006.  

The commission recently approved a request filed by the company, which is based in Joplin, to lower the fuel adjustment charge on the bills of its electric customers. That lowered the bill of a residential customer using 1,000 kilowatt-hours of electricity a month by approximately $6 a month.

That change took effect on June 1 to reflect a reduction in Empire’s fuel and purchased power costs for a six-month period from September 2011 through February 2012.

The company’s last rate increase was announced in May of last year. The PSC granted an annual revenue increase of $18.7 million, or 4 percent. For a residential customer using 1,000 kilowatt-hours of electricity per month, the monthly increase was about $3.52.

Empire officials filed that rate case on Sept. 28, 2010. Public hearings in which customers forcefully complained about the proposed increase followed in March. Empire had sought a 9.2 percent annual revenue increase, or $36.5 million. That would have added $13.60 to the monthly bill of a customer who uses 1,000 kilowatt-hours of electricity.

The company sought to recover costs associated with its own power plants, two new coal-fired power plants, and two wind-farm contracts.

The new rate case will be reviewed by the commission after public hearings are held in Joplin and at Reeds Spring later this year. It usually takes 11 months before final action takes place on a request to increase rates.

Missouri territory

The Empire District Electric Co. serves approximately 149,500 electric customers in the Missouri counties of Barry, Barton, Cedar, Christian, Dade, Dallas, Greene, Hickory, Jasper, Lawrence, McDonald, Newton, Polk, St. Clair, Stone and Taney.



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