The Girard City Council on Monday authorized City Attorney Richard Loffswold to fire the latest shot in its ongoing battle with Westar Energy over what the city calls unfair utility billing overcharges.
The council voted unanimously following an executive session to give Loffswold the go-ahead to file a complaint with the Federal Energy Regulatory Commission (FERC), claiming Westar had overcharged the city for wholesale electricity to the tune of more than $1.1 million.
Last week, Loffswold was in Kansas City for a mediation session with the utility to try to reach a settlement agreement. He couldn't discuss the particulars of the mediation, beyond noting it wasn't successful.
Girard wasn't the only southeastern Kansas community allegedly overcharged, Loffswold said. Between about October 2001 and May 2007, 12 cities paid an estimated $7 million to $8 million extra for electricity purchased from Westar.
“Girard is the last one seeking reimbursement” for the overcharges, Loffswold said.
It all started in the early 1990s. Girard contracted to buy electricity in January 1991 from Kansas Gas and Electric. Shortly thereafter, KG and E proposed a merger with Kansas Power and Light. Several Kansas cities and other utilities filed opposition to the merger proposal, claiming it would unfairly impact competition.
The oppositions were eventually dropped, however, in exchange for contract extensions from the new company. Girard's contract was extended for 10 years, to 2007.
In the interim, sometime in late 2001 or early 2002, KG and E and Westar allegedly changed the math used to calculate how much cities were paying for electricity for their customers, Loffswold said.
“They changed it and didn't tell us about it,” he said. “Everybody noticed their power bills started increasing by more than could be explained by increases in the cost of natural gas or coal.”
Chanute was the first community to take action on the discrepancies. Chanute filed suit against KG and E to recoup the difference.
Chanute “ultimately settled and that's when we found out what Westar had done,” Loffswold said. “They offered us basically 27.4 percent of the amount we were overcharged, with no interest and said, 'Take it or leave it.'”
Some cities settled with Westar while others didn't take any action, he said. Individual communities were allegedly overcharged as little as $3,000 to as much as almost $4 million, Loffswold said.
The initial suit against Westar was filed in state court, but was moved the U.S. District Court for the District of Kansas. The case is still proceeding in the U.S. District Court, Loffswold said, with a trial scheduled next year.
The city of Girard no longer buys wholesale electricity from Westar. Its contract wasn't renewed when it expired, Loffswold said. The city now buys power from different sources, including the Kansas Power Pool and from hydro-electric generation through the Grand River Dam Authority, based on Grand Lake near Grove, Okla.
Once filed with the Federal Energy Regulatory Commission, Westar will be notified of the complaint and will be given a chance to respond to the charges. FERC can then initiate an investigation and call for testimony and evidence prior to rendering a decision. At the very least, Loffswold said, the process could take several months.
“In my personal opinion, somebody needs to hold (Westar) accountable,” Loffswold said. “Offering somebody 27 percent of what you've overcharged them over the years isn't fair.
“They have the mentality their big so they can get away with it. We'll see if that's correct.”