Westar Formula Rate
and Regulatory Update
Dennis Reed
Transmission Formula Rate
What is a
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
Requirements
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
Formula 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
You are here!
Jan. 1
Oct. 30
Oct. 22
Oct. 15
Jul. 15
Jun. 23
Jun. 15
Apr. 15
Jan. 1
Posting & Review
Time Line
The Formula Rate
Update
You are here!
Phase 1
Inputting Actual Cost data
(Complete by June 15)
TFR tabs with data:
Act. Net Rev Req.
Act. Gross Rev Req.
Tabs A1-A12
TU (Partial)
Phase 2
Inputting Projected Costs
(Complete by October 15)
TFR tabs with data:
Proj. Net Rev Req.
Proj. Gross Rev Req.
Tabs P1-P5
BPF
EPP (No projects)
TU (Complete)
SPP
Form 1 & Acctg. Data
Budget information
Other 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 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 .
Protocols
• 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!