Westar Formula RateWestar Formula Rate and Regulatory Update and Regulatory Update

Dennis Reed

Transmission Formula RateTransmission Formula Rate

What is aWhat is a Formula Rate? Formula Rate?

• A standard Rate is a fixed charge set in a regulatory process through a rate case– The fixed rates do not change unless another rate

case is filed

• A formula rate is a fixed method for calculating a rate based upon set inputs– The charges to customer update annually– Data input comes from public sources (Form 1)– Recalculation of the charges is done pursuant to a set

of protocols

Revenue Revenue RequirementsRequirements

The sum of the following:• Return on Equity (Rate Base * Rate of Return)

• O&M

• Depreciation Expense

• Taxes other than income

• Income Taxes

Westar’s Westar’s Formula RateFormula Rate

• Revenue Requirements used for billing is for a projected Test Year

• Changes in costs are projected in all five components of the formula

• A “True-up” calculation is done each year to compare the Actual Rev. Req. to the projected

• Any refund or surcharge is an adjustment to the Rev. Req. for the next Projected Period– Minimizes work by not having to do annual refunds or

surcharges

Posting & Review Posting & Review Time LineTime Line

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The Formula Rate The Formula Rate UpdateUpdate

Phase 1Inputting Actual Cost data

(Complete by June 15)

TFR tabs with data:Act. Net Rev Req.

Act. Gross Rev Req.Tabs A1-A12TU (Partial)

Phase 2Inputting Projected Costs (Complete by October 15)

TFR tabs with data:Proj. Net Rev Req.

Proj. Gross Rev Req.Tabs P1-P5

BPFEPP (No projects)

TU (Complete)

Form 1 & Acctg. Data Budget information

SPP

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Other IssuesOther Issues

• The True-up amount is based upon the results of the TFR effective June 1, 2008 (per settlement in ER08-396)– Rev. Req. is without any “true-up” value from a previous period

(footnote E, TU tab)

• This year’s calculation is still part of the transition – Format of June 2008 formula is different from current one– Historic period to a projected period– Change in “Rate Year” from 12 months ending May to calendar

year period

Formula Rate ChangesFormula Rate Changes

• Since October, 2008 the following two Dockets were approved that affect the formula– ER08-777/ER08-396 – Storm Damage Amortization

Compliance filing modifying footnote S, Actual Gross Revenue Requirement tab.

– ER09-481 – Ministerial Filing to correct several footnote and line description errors.

• Additional footnote errors were discovered in the update process– A subsequent filing is being looked at in the next

several months .

ProtocolsProtocols

• Specify “how” the formula works

• Gives specific rights to Customers– Review input– Point out input errors– Procedures to handle disputes

• Posting – Westar’s OASIS is changing!