No. 88,013
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
WESTERN RESOURCES, INC.,
and
KANSAS GAS AND ELECTRIC COMPANY,
Petitioner/Appellants,
v.
THE STATE CORPORATION COMMISSION
OF THE STATE OF KANSAS,
Respondent/Appellee.
SYLLABUS BY THE COURT
1. On appeal, the findings of the Kansas Corporation Commission are presumed valid, and its order may only be set aside if not supported by substantial competent evidence, is without foundation in fact, or is otherwise unreasonable, arbitrary, or capricious.
2. Once testimony is admitted in a rate case, the Kansas Corporation Commission has discretion to weigh and accept or reject that testimony. On appeal, the court may not substitute its judgment for that of the agency even though there may be conflicting evidence of record which would support a contrary result.
3. Courts recognize the decisions of the Kansas Corporation Commission (KCC) involve complex problems of policy, accounting, economics, and other special knowledge to achieve just and reasonable utility rates. Consequently, a court may not set aside an order of the KCC merely because the court would have arrived at a different conclusion had it been the trier of fact.
4. A court may reverse or nullify a Kansas Corporation Commission order only when the decision is so wide of the mark as to be outside the realm of fair debate.
5. After a Kansas Corporation Commission hearing has ended, a party may request, if good cause is shown, that the record of testimony be reopened. When seeking to submit additional evidence in a petition for reconsideration, the additional evidence must have either been not available or not known to exist at the time of the hearing. In addition, the nature and purposes of the evidence must be briefly stated and cannot merely be cumulative.
6. There is an elusive range of reasonableness in calculating a fair rate of return for a public utility. A court can only concern itself with the question as to whether a rate is so unreasonably high as to be unlawful. The in-between point, where the rate is most fair to the utility and its customers, is a matter for the Kansas Corporation Commission's determination.
7. Where the Kansas Corporation Commission rules in a manner inconsistent with a previous decision, the law requires that the commission explain its change in position.
8. Failure to exhaust administrative remedies generally is a bar to judicial review of agency action.
9. The Kansas Corporation Commission's (KCC) findings of fact must be specific enough to allow judicial review of the reasonableness of a final order. However, the KCC is not required to explain why it did not accept every piece of evidence presented.
10. Under the facts of this case, the Kansas Corporation Commission acted within its statutory authority, and there exists substantial competent evidence to support its findings and decisions to achieve just and reasonable utility rates.
Appeal from Kansas Corporation Commission. Opinion filed March 8, 2002. Affirmed.
Martin J. Bregman, Executive Director, Law, of Western Resources, Inc., of Topeka; Michael Lennen, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita; and James M. Fischer, of Fischer & Dority, P.C., of Jefferson City, Missouri, for appellants.
Caroline Ong, advisory counsel, and Susan B. Cunningham, general counsel, of the Kansas Corporation Commission, for appellee.
Walker Hendrix and Niki Christopher, for intervenor Citizens' Utility Ratepayer Board.
Kirk T. May and Matthew T. Geiger, of Rouse Hendricks German May PC, of Kansas City, Missouri, for intervenor The Goodyear Tire & Rubber Company.
Sarah J. Loquist and Thomas R. Powell, of Hinkle Elkouri Law Firm L.L.C., of Wichita, for intervenor Unified School District No. 259.
David J. Roberts and James P. Zakoura, of Smithyman & Zakoura, Chartered, of Overland Park, for intervenor Kansas Industrial Consumers.
Timothy E. McKee, of Triplett, Woolf & Garretson, LLC, of Wichita, Greg D. Ottinger, of Duncan & Allen, of Washington, D.C., Gary E. Rebenstorf, city attorney, and Joe Allen Lang, first assistant city attorney, for intervenor City of Wichita.
Kevin M. Fowler and John C. Frieden, of Frieden, Haynes & Forbes, of Topeka, for intervenor City of Topeka.
Before RULON, C.J., LEWIS and KNUDSON, JJ.
KNUDSON, J.: Western Resources, Inc. (WRI) and Kansas Gas and Electric Company (KGE) filed this joint petition for judicial review from a final order of the Kansas Corporation Commission (KCC) in an electric rate proceeding instituted by the utilities.
Jurisdiction is conferred upon this court under K.S.A. 2001 Supp. 66-118a(b) and in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq. In a separate but related appeal, KIC also filed a petition for judicial review from the KCC's order. See Kansas Industrial Consumers v. Kansas Corporation Comm'n, No. 88,012, filed March 8, 2002.
On appeal, WRI and KGE contend the KCC erroneously interpreted or applied the law, the KCC's order was not supported by substantial competent evidence, and its decision was otherwise unreasonable, arbitrary, or capricious. We conclude the KCC acted within its authority, and there exists substantial competent evidence to support its findings and decisions to achieve just and reasonable utility rates.
The KCC Proceedings
In November 2000, WRI filed an application with the KCC seeking an approximate $92,000,000 rate increase for its electric service division. On the same date, KGE, a wholly owned subsidiary of WRI, also filed an application with the KCC for a rate increase of almost $58,000,000. Both applications were consolidated into the same agency docket, 01-WSRE-436-RTS.
Various parties intervened in the proceedings before the KCC. The intervenors included Citizens' Utility Ratepayers Board (CURB), Kansas Industrial Consumers (KIC), City of Wichita, City of Topeka, Unified School District No. 259 (U.S.D. 259), Midwest Energy, Inc., Empire District Electric Company (Empire), Kansas Municipal Energy Agency, The Goodyear Tire & Rubber Company (Goodyear), ONEOK, Inc. d/b/a Kansas Gas Service Company, and Southcentral Municipal Energy Agency.
The KCC held evidentiary hearings on the applications from May 17, 2001, through June 4, 2001. Subsequently, all parties had the opportunity to file post-hearing trial briefs and reply briefs.
On July 25, 2001, the KCC issued a decision on the rate applications. Its order dealt with a wide variety of issues pertaining to the revenue requirements of WRI and KGE. The KCC ordered a decrease of KGE's revenue requirement by over $41,000,000 and increased WRI's revenue requirement by $18,470,583. Timely petitions for reconsideration attacking various portions of the initial order were filed by KIC, the KCC Staff, WRI and KGE, and the City of Wichita.
On September 5, 2001, the KCC issued its order on reconsideration. In this order, the KCC made various adjustments with respect to certain issues and clarified other points. The end result was a determination that WRI had an increased revenue requirement of $25,401,336 and KGE had a decrease in its revenue requirement of $41,062,598.
Timely petitions for reconsideration were filed from the order on reconsideration by KIC, WRI and KGE, and Goodyear. The petitions for reconsideration were denied in the KCC's final order of October 11, 2001. WRI and KGE filed this joint petition for judicial review.
Standard of Review
Pursuant to K.S.A. 66-118c, this court reviews an order of the KCC under the KJRA. In their brief, WRI and KGE contend the KCC erroneously interpreted or applied the law, the KCC's order was not supported by substantial evidence, and the KCC's decision was otherwise unreasonable, arbitrary, or capricious. Those claims of error are consistent with the jurisdictional grant of the KJRA. See K.S.A. 77-621.
On appeal, the KCC's findings are presumed valid, and its order may only be set aside if it is not supported by substantial competent evidence, is without foundation in fact, or is otherwise unreasonable, arbitrary, or capricious. Williams Natural Gas Co. v. Kansas Corporation Comm'n, 22 Kan. App. 2d 326, 334-35, 916 P.2d 52, rev. denied 260 Kan. 1002 (1996).
The legislature has vested the KCC with broad discretion in weighing the competing interests involved in setting public utility rates. Because discretion is delegated to the KCC, the courts do not have authority to substitute their judgment for that of the KCC. The courts also have recognized that the KCC's decisions involve complex problems of policy, accounting, economics, and other special knowledge to achieve just and reasonable utility rates. Consequently, a court may not set aside a KCC order merely because the court would have arrived at a different conclusion had it been the trier of fact. The court may reverse or nullify a KCC order only when the decision "'"is so wide of the mark as to be outside the realm of fair debate."'" Williams Natural Gas Co., 22 Kan. App. 2d at 335 (quoting Kansas Gas & Electric Co. v. Kansas Corporation Comm'n, 239 Kan. 483, 497, 720 P.2d 1063 [1986]).
Imputation of Off-System Sales Revenues
WRI and KGE first challenge the KCC's decision to impute revenues to the companies for additional off-system wholesale sales of electricity as a result of new generation facilities brought on line during or shortly after the test year. WRI and KGE contend the revenues attributed to those facilities were speculative and contrary to the record. WRI and KGE also contend the KCC's decision was not based upon substantial competent evidence and post-hearing evidence proffered by the applicants was improperly rejected.
The test year adopted by the KCC ended on September 30, 2000. In their applications, WRI and KGE requested that the KCC include in their rate base costs relating to new generation facilities incurred outside of the test year. The new facilities included three combustion turbine peaking units at the Gordon Evans site and a Purchase Power Agreement (PPA) under which WRI could purchase 200 megawatts of capacity from Westar Generating, Inc.'s State Line facility; Westar is a wholly owned subsidiary of WRI. These new facilities created about 514 megawatts of new capacity for WRI retail customers. Two of the three Gordon Evans units went into service during the test year; the third unit went into service in June 2001. Westar's State Line plant went into commercial service in June 2001. The KCC determined the increased capacity for WRI was a necessary and prudent investment and included the costs in WRI's rate base.
The above adjustment to rate base required the KCC to also consider whether the additional generation capacity would likely increase retail and off-system wholesale sales. The KCC agreed with WRI and KGE that the increase in retail customers was not sufficiently quantified. Next, the KCC noted the steady increase of wholesale sales in recent years and the marketing projections made by WRI and KGE to the financial analysts on Wall Street. Ultimately, the KCC added an additional $19,191,165 in revenue from off-system sales. The KCC's determination was based upon evidence that there would be 28,000 megawatt hours (MWh) available for off-system sales at $750 per MWh.
WRI and KGE challenged this adjustment in their petition for reconsideration. In their petition, WRI and KGE asked the KCC to consider additional evidence in the form of an affidavit with calculations from a WRI manager, Shane Mathis. In its subsequent order, the KCC declined to accept Mathis' affidavit, noting WRI and KGE had the opportunity to provide the information in a timely fashion as prefiled rebuttal evidence or during the hearing. The KCC also found that the determination there would be additional off-system sales was not speculative. However, the KCC did agree, "based on its familiarity with market conditions," the $750 per MWh was too high and reduced the adjustment to $12,794,600 based on a price of $500 per MWh. WRI and KGE filed a timely petition for reconsideration from this order that was denied by the KCC.
The KCC is to determine the reasonable value of property owned by a public utility which is used and required in its public operations. K.S.A. 2001 Supp. 66-128(a). Generally, property which has not been completed and dedicated to commercial service is not considered used and useful; however, the KCC has discretion to include the cost of uncompleted property in several circumstances. K.S.A. 2001 Supp. 66-128(b)(2). Moreover, we have previously recognized the KCC has discretion to include in rate calculations any costs and revenues not part of the test year if the changes are known and measurable. Gas Service Co. v. Kansas Corporation Commission, 4 Kan. App. 2d 623, 635-36, 609 P.2d 1157, rev. denied 228 Kan. 806 (1980).
WRI and KGE contend the price finally adopted by the KCC$500 per MWhwas several times greater than the prices actually received by the utilities for off-systems sales during the test year and, therefore, was speculative and unsupported by the record.
Various witnesses testified about the off-system sales issue with, predictably, a wide variety of proposals.
Witness Sponsor Projected Sales Price/MWh $ Sales Margin
A. Crane CURB 28,000 MWh $750 $21M --
T. Corrigan Wichita 435,000 MWh $31.02 (net) $30M $13.5M
Ed Bodmer Topeka -- -- -- $11M
Leslie Morgan WRI/KGE (Unspecified) $7.49 (net) -- --
In challenging the KCC's decision, WRI and KGE argued their generating facilities performed at extraordinarily high levels during the test year, which permitted higher off-system sales than normal, and that performance would be unlikely to continue. In their applications, WRI and KGE reduced their revenue requirement by $11.8 million to account for "as available" wholesale sales made during the test year. They argue any other adjustments are speculative. The utilities also argued the new generation capacity was created to service their retail load obligations and to reduce the potential for power outages and increased costs for purchases on the spot market; therefore, the new capacity should not be linked to increased wholesale transactions. Finally, they refer to evidence indicating the average wholesale market price actually received by WRI from 1994 to 2000 ranged from $27.24 to $31.16 per MWh, averaging $30.80 for the last 3 years.
WRI and KGE admitted they always try to maximize their sales margins and acknowledged the possibility of increased off-system revenues. WRI has a power marketing group which serves both utilities as well as other operations of WRI. The group provides power trading and wholesale marketing services with the purpose of trading or selling power on the wholesale market; there was some evidence the group used utility assets to make these sales. The record also established a fairly steady increase in WRI's off-system sales between 1994 and 2000.
The KCC relied heavily upon the testimony of CURB's expert witness, Andrea Crane, who based her projections of $750/MWh on a WRI presentation of potential earnings made to financial analysts. WRI and KGE contend this presentation was merely potentialities proposed to analysts that were based on assumptions of the most favorable possible market. The KCC found Crane's calculations reasonable and in its initial order adopted them, thereby imputing additional revenue of just over $19 million.
On appeal, WRI and KGE argue that Crane's calculations were speculative and contrary to the clear tenor of the other evidence regarding actual wholesale prices and volumes. Once testimony is admitted in a rate case, the KCC has discretion to weigh and accept or reject that testimony. Kansas Gas & Electric Co. v. Kansas Corp. Comm'n, 14 Kan. App. 2d 527, 538, 794 P.2d 1165, rev. denied 247 Kan. 704 (1990).
We are not impressed with the contention Crane's testimony does not constitute substantial competent evidence of off-system revenues. We believe it is disingenuous for WRI to argue its representations to Wall Street analysts and the financial markets should be considered tantamount to exaggerated puffery rather than an honest appraisal of expected growth and earnings. We conclude WRI's representations to potential investors and analysts constitutes credible evidence to support Crane's opinion and the ultimate finding entered by the KCC. Moreover, as we will next discuss, on reconsideration the KCC mitigated from the high side of Crane's calculations.
On reconsideration, the KCC reduced the off-system sale price projections to $500 per MWh. WRI and KGE contend there is no evidence in the record to support that price figure and that the KCC erred in using a price figure based on "its [the KCC's] familiarity with market conditions." In connection with this argument, WRI and KGE also contend the KCC erred in relying on its own knowledge while denying the companies' request to add additional testimony through the affidavit of Shane Mathis that was included with their motion to reconsider.
With respect to the KCC's refusal to consider the supplemental affidavit of Shane Mathis, the standard of review is abuse of discretion. See Kansas Pipeline Partnership v. Kansas Corporation Comm'n, 24 Kan. App. 2d 42, 50, 941 P.2d 390, rev. denied 262 Kan. 961 (1997). See also Kansas Gas & Electric Co. v. Kansas Corp. Comm'n, 14 Kan. App. 2d at 537 (admission of expert testimony lies within KCC's discretion in hearings before that body).
After a KCC hearing has ended, a party may request, if good cause is shown, that the record of testimony be reopened. K.A.R. 82-1-230(l). When seeking to submit additional evidence in a petition for reconsideration, the additional evidence must have either been not available or not known to exist at the time of the hearing. K.A.R. 82-1-235(c)(4). In addition, the nature and purposes of the evidence must be briefly stated and cannot merely be cumulative. K.A.R. 82-1-235(d).
WRI and KGE do not contend Mathis' evidence was either new or undiscoverable. They conceded the affidavit was somewhat cumulative (although more specific) of the evidence presented at the hearing. WRI and KGE also argue that if the KCC can rely on evidence outside the record (i.e., its own knowledge of prices), it was arbitrary not to accept the additional evidence.
In support of this argument, WRI and KGE refer to Colorado Interstate Gas Co. v. F.E.R.C., 850 F.2d 769 (D.C. Cir. 1988). In Colorado Interstate, the appellate court held FERC's unexplained decision to treat Kansas and Texas ad valorem taxes differently for purposes of natural gas price caps was the "quintessence of arbitrariness and caprice." 850 F.2d at 774. WRI and KGE fail to explain how this case supports their claim that the KCC's refusal to accept additional evidence was somehow unlawful or arbitrary.
In this case, the KCC held extensive evidentiary hearings over a period of at least 12 business days. The record consists of 62 volumes (plus five notebooks) of pleadings, prefiled testimony, exhibits, hearing transcripts and post-trial briefs and motions. WRI and KGE presented prefiled rebuttal testimony from the witness in question, Shane Mathis, who testified about WRI's power marketing business and, to a limited extent, its wholesale sales practices. This rebuttal testimony was filed well after the testimony of Andrea Crane and Timothy Corrigan, who both gave opinions regarding the off-system sales issue.
WRI and KGE have not justified their failure to file prefiled rebuttal testimony or present this evidence more specifically in the KCC hearings. We conclude the KCC did not abuse its discretion in declining to reopen the record for evidence that could have been presented during the hearing.
A remaining issue is whether the KCC's finding of a $500 per MWh price figure for off-system sales which was based on its "own familiarity" with the market is supported by substantial and competent evidence. We answer this question "yes" because the KCC's determination was within a zone of reasonableness. The Kansas Supreme Court has observed:
"There is an elusive range of reasonableness in calculating a fair rate of return. A court can only concern itself with the question as to whether a rate is so unreasonably low or so unreasonably high as to be unlawful. The in-between point, where the rate is most fair to the utility and its customers, is a matter for the State Corporation Commission's determination." Southwestern Bell Tel. Co. v. State Corporation Commission, 192 Kan. 39, Syl. ¶ 17, 386 P.2d 515 (1963).
See also Farmland Industries, Inc. v. Kansas Corporation Comm'n, 24 Kan. App. 2d 172, 195, 943 P.2d 470, rev. denied 263 Kan. 885 (1997) (in fixing a rate within the zone of reasonableness, the KCC must apply a balancing test considering the interests of all concerned parties).
In this proceeding, the KCC finding was a final adjustment of $12,794,600 of additional off-system revenues. This adjustment was consistent not only with Crane's testimony but also with the testimony of two other expert witnesses, Timothy Corrigan and Ed Bodmer. Corrigan recommended a net sales revenue of $13.5 million. Bodmer proposed a net sales revenue of approximately $11 million.
For all of the foregoing reasons, we conclude the KCC did not err in its imputation of additional off-system sales revenues.
Unamortized GainLaCygne 2
The second issue raised by WRI and KGE concerns an adjustment to rate base entered by the KCC to recognize an unamortized gain realized by KGE on the sale of the LaCygne 2 electric generating plant in 1987. This ruling reduced KGE's rate base by $86.5 million.
In 1987, KGE entered into a financing arrangement to sell its 50% interest in the new LaCygne 2 facility (a coal-fired generating plant) to an owner-trustee and lease the facility back for approximately 29 years. At the end of the lease, KGE would have the option to renew the lease or purchase the plant at fair market value. The sale price for the plant, $392.1 million, far exceeded the book value of $69.4 million.
In seeking approval of the sale/leaseback transaction, KGE advised the KCC the transaction permitted it to capture certain tax benefits as a lessee that it would not have as an owner. KGE also claimed this transaction benefitted customers by delaying rate increases, causing some rate reductions, and improving KGE's financial health.
The KCC approved the sale/leaseback transaction in September 1987 in KCC Docket No. 156,521-U. The KCC, in its order, agreed that KGE's ratepayers might benefit from the transaction, but only if KGE's rates accurately reflected the company's revenue requirement. The KCC noted the exact impact of the sale could not be accurately determined at that time. According to the order, KGE proposed to amortize the gain on the sale to its Kansas jurisdictional cost of service over the life of the lease and proposed that any unamortized gain could be used in reducing rate base in future rate cases.
In approving the sale, the KCC specifically directed its Staff to investigate "all aspects of KG&E's cost of service" and to determine whether existing rates accurately reflected KGE's revenue requirement. Staff was ordered to report its findings to the KCC, which would then determine if any rate adjustments were necessary.
When the present rate case was filed, the Staff of the KCC and the KIC proposed that KGE's rate base be adjusted to treat the remaining unamortized gain from the sale of the LaCygne facility as cost-free capital. The Staff witness, James Proctor, testified that KGE realized a $322.7 million gain from the sale of the facility and recommended KGE's rate base be reduced by $86.5 million. Proctor testified he was on the KCC's Staff in 1987 and that the KCC approved the sale-leaseback because KGE offered to allow consideration of any unamortized gain in future rate cases. WRI and KGE concede that at the time of the current proceeding, over $87 million of the net gain from the LaCygne sale had not yet been amortized on KGE's books.
Similarly, James Dittmer, an expert testifying on behalf of KIC and Goodyear, stated the gain from the sale of the LaCygne facility essentially was cost-free capital and unless rate base was reduced to reflect this gain, the ratepayers would effectively be paying interest or an equity return on funds which had no true financing cost. Moreover, it would allow the utility to pay the higher lease payments (which included a premium over the book value of the plant) without offsetting those higher costs with the accompanying gain the utility received in the transaction. Dittmer recommended KGE's rate base be reduced by $86 million.
Dittmer acknowledged ratepayers have benefitted from the "levelizing" effect of the sale/leaseback and the amortization of the gain in the cost of service calculation already recorded by KGE. However, he explained the proposed adjustment was not a double benefit to ratepayers, but instead would prevent shareholders from earning a return on cost-free capital. Dittmer also noted WRI and KGE were not contending the adjustment would deprive company shareholders of a fair rate of return.
In opposing this proposed adjustment, WRI and KGE presented testimony that the LaCygne sale/leaseback was designed to improve KGE's financial health. The companies also noted previous orders of the KCC did not intimate the gain should be used to reduce KGE's rate base. Other arguments were that the proposed adjustment gave a double benefit to ratepayers and ignored the "true economic reality" of the transaction, the ratepayers more than benefitted because the sale proceeds were used to reduce the cost of capital by repurchasing stock and buying back high coupon debt, thereby reducing KGE's cost of service, and reference in the 1987 order regarding KGE's offer to permit unamortized gains to be used to reduce rate base was inconsistent with KGE's rate application.
In the present case, the KCC ordered the remaining $86 million unamortized gain from the 1987 transaction be used to reduce KGE's rate base. The KCC agreed the proceeds should be considered cost-free capital and noted this same adjustment was proposed by Staff in a 1997 rate proceeding involving the companies, Docket Nos. 193,306-U and 193,307-U. Finally, the KCC rejected WRI and KGE's arguments that the 1987 order misstated KGE's proposal; the KCC reasoned that if KGE disagreed with the language of the 1987 order, it should have filed a timely petition for reconsideration.
On appeal, WRI and KGE argue the KCC has unreasonably deviated from its order in prior KGE rate proceedings contrary to Kansas law. Generally, our appellate courts recognize a regulatory body has authority to change positions on an issue if the new position is supported by substantial competent evidence. Thus, parties may not reasonably rely on any prior order of the body to such an extent to invoke the doctrine of equitable estoppel. Northwest Cent. Pipeline Corp. v. Kansas Corp. Comm'n, 237 Kan. 248, 259, 699 P.2d 1002 (1985), vacated on other grounds 475 U.S. 1002, 89 L. Ed. 2d 289, 106 S. Ct. 1169 (1986). However, our courts also have recognized that when an administrative agency deviates from a policy it had adopted earlier, it must explain the basis for the change. Farmland Industries, Inc. v. Kansas Corp. Comm'n, 24 Kan. App. 2d at 191. Where the KCC rules in a manner inconsistent with a previous decision, the law requires the commission to explain its change in position. Southwest Kan. Royalty Owners Ass'n v. Kansas Corporation Comm'n, 244 Kan. 157, 190, 769 P.2d 1 (1989).
In this case, however, WRI and KGE have failed to establish the KCC deviated from any prior orders. The KCC's 1987 order clearly indicated the KCC was concerned about the lack of clarity as to how KGE would treat the gain it would realize in the sale of the property. The order approving the transaction specifically noted KGE proposed to amortize the gain on the sale to its Kansas jurisdictional cost of service over the life of the lease transaction and that any unamortized gain could be considered as rate base adjustments in future rate cases. Based on the clear language of the order, the adjustment ordered in the present case was consistent rather than inconsistent with the 1987 order.
KGE argues the 1987 order language was inconsistent with KGE's original application. KGE also argues this reference to future rate cases was not binding because it was not included in the order language at the end of the KCC's order. Neither of these arguments are compelling. KGE's original application clearly proposed that in addition to the allocation of the gain through amortization to cost of service, "the benefits from the disposition of the proceeds from the Transaction will be passed on to ratepayers." This seems to give broad assurances about the benefits ratepayers would receive. Morever, the order language in the 1987 ruling dealt with authorizing the sale/leaseback transaction and its current rate treatment. The KCC, as always, retained jurisdiction over the issues. Finally, nothing in subsequent proceedings involving KGE altered the provision from the 1987 order, recognizing the possibility of future reductions of rate base by unamortized portions of the gain.
For these reasons, the KCC's decision to allow a reduction of KGE's rate base for the unamortized gain is not inconsistent with prior KCC orders or rulings. The fact the KCC initially permitted KGE to amortize the gain does not alter the fact KGE was on clear notice of the possibility that any remaining unamortized portions might, in future cases, be used to reduce its rate base.
WRI and KGE also argue the LaCygne 2 adjustment is illegal because it gives all the benefits of the sale to ratepayers in violation of <