- Associated Press - Sunday, March 30, 2014

KANSAS CITY, Mo. (AP) - A dispute between Kansas City Power & Light and Missouri energy regulators over a plant in Mississippi could be headed to the U.S. Supreme Court, and might eventually lead to increased rates for Missouri customers.

The question is whether Missouri customers should pay KCP&L;’s costs for transmitting power from Mississippi to Missouri. When the utility company acquired the Mississippi plant in 2011, the Missouri Public Service Commission said customers didn’t have to pay the transmission costs, which were about $5 million a year.

KCP&L; sued to recover the transmission costs but lost in two courts. The Kansas City Star reports (https://bit.ly/1h3a0xb) the utility is asking the U.S. Supreme Court to rule in the dispute.

The utility wants to cover the transmission costs from the plant near Clarksdale, Miss., by raising rates on 309,000 customers in the former Aquila Inc. service area through 2032. KCP&L; acquired the Mississippi plant when it bought Aquila in 2008.

KCP&L; contends that because the dispute involves the transmission of power across state lines, the Federal Energy Regulatory Commission is in charge of setting the rates for transmitting from Mississippi. It says the Missouri Public Service Commission had no authority to intervene.

Utilities nationwide are watching the case because they have always assumed that transmission costs across state lines could be recovered from customers.

The trade group Edison Electric Institute warns in a filing to the Supreme Court that “the Missouri loophole is . uniquely positioned to spread like a virus to other states.”

The Supreme Court has not said if it will hear the case but earlier this month it requested the views of the solicitor general, the federal government’s lawyer to the Supreme Court.

If KCP&L; wins the case, it wants to raise rates on former Aquila customers an average of $200 through 2032. Business customers would pay more. That increase would raise $100 million. Aquila, which was called Missouri Public Service and St. Joseph Light & Power, covered much of western Missouri and some Kansas City suburbs.

KCP&L; believes power from the plant, even including transmission costs, is cheaper than other in-state options.

“The facility benefits our customers in two ways: price and reliability,” the company said in an email to the Star.

The case is also considered an important test of federal authority over energy policy. It hinges in part on the doctrine that interstate transmission rates approved by a federal agency are considered just and reasonable, the Star reported. Another issue is the U.S. Constitution’s supremacy clause, which allows the federal government to trump state authority.

Richard Levy, the J.B. Smith distinguished professor of constitutional law at the University of Kansas, said state regulators can believe they should determine the best interests of utility customers, but federal interest in interstate transmission of electricity will be important in the KCP&L; case.

“I do feel there is a question lurking in the background about how much (the selling of electricity) is a national business,” he said.


Information from: The Kansas City Star, https://www.kcstar.com

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