Missouri utility regulators on Thursday approved kansas city power & Light's planned coal-fired power plant near Weston and higher rates to help pay for it.
The Missouri Public Service Commission voted 5-0 for an order that will allow the company to finance the plant and other projects, which eventually could increase rates by 15 percent to 20 percent. Besides the plant, the $1.3 billion package includes energy conservation projects, at least one wind farm and some retrofits to reduce pollution at existing plants.
The plans still need the approval of Kansas regulators, and the plant has some environmental permits pending.
The rate increases eventually could cost a household with an average $100 electric bill an extra $15 to $20 a month. But they would be the first big rate increases in nearly two decades for the utility's half million customers in Missouri and Kansas.
The effort to gain approval began in earnest early last year with public meetings. Some parties said the process was too secretive and at times cut some parties out. An agreement was reached in March by several parties, including the Public Service Commission's staff, the Missouri Office of the Public Counsel and some industrial customers. The agreement said the plant was needed to meet future demand for power, and gave some assurances the utility would be allowed to recover the cost.
"Our team worked hard over the past 18 months" on a package "that will meet the growing regional demand for energy, balancing environmental stewardship and our customers' need for affordable and reliable energy," said Mike Chesser, chairman and chief executive officer of Great Plains Energy Inc., KCP&L's parent company.
The Sierra Club and Concerned Citizens of Platte County continued to oppose the coal-fired plant over concerns about the environmental impact. They also said the plant was not necessary to meet future demand, especially if conservation and alternative-energy measures were taken.
"We are disappointed by the commission's decision," said Susan Brown of the Concerned Citizens of Platte County, which is considering going to court to continue its fight. "This isn't a done deal."
Another opponent, Ron McLinden, a retired environmental policy analyst, said: "People who testified before the commission at public hearings were unanimous in their opposition to another power plant and in support of energy efficiency. The commission seems to have ignored the much greater economic benefit in a strategy of promoting energy efficiency throughout the region. Yes, there's some money for efficiency in the company's plan, but it's minuscule compared with the expenditure for new generating capacity."
The plant, which would be built northwest of KCP&L's Iatan 1 plant near Weston, is projected to produce 800 to 900 megawatts of electricity, or roughly enough to provide power for 700,000 homes. KCP&L wants to use 500 megawatts of the capacity and have partners take the rest. Construction is expected to begin next year if the remaining regulatory approvals are received.
KCP&L plan, as approved by Missouri regulators, calls for building 100 megawatts of wind power next year, with the possibility of building an additional 100 megawatts later. The company would also spend $280 million to reduce pollution at its La Cygne 1 and Iatan 1 coal-fired plants.
Missouri approval is a crucial step, especially since last year there were questions about whether the regulators would go along with the plan. The state has traditionally been reluctant to approve a big utility project such as a power plant before it is in operation. But the March agreement and Thursday's order endorsed electricity rates that should allow the company sufficient cash flow to pay for the plant and keep its debt rating at investment grade.
The specific amounts of those rate increases will be decided later by state regulators and are expected to be phased in starting in 2007. By 2010, when the power plant is expected to begin operation, rates could be up 20 percent.
"The plan's design enables the western Missouri utility to continue to provide safe and adequate service, while striking a reasonable and appropriate balance between the interests of customers and shareholders," the commission said in a statement.
KCP&L has said plant construction would create up to 1,000 construction jobs with a four-year payroll of $300 million.
About 100 long-term jobs would be created.