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Minutes for HB2527 - Committee on Energy, Utilities and Telecommunications
Short Title
Establishing cost recovery mechanisms for public utilities that construct certain electric generation facilities, revising the determination of rate base, capital structure and return on equity in utility rate proceedings and revising the provision of economic development electric rates.
Minutes Content for Tue, Feb 6, 2024
Chairperson Delperdang opened the hearing on HB2527.
Nick Myers provided an overview of the bill.(Attachment1) Mr. Myers responded to questions from committee members.
Chair recognized proponents as follows:
Chuck Caisley, Evergy (Attachment2) who testified in support of the bill. Mr. Caisley explained the merger between Westar and KCP&L that created Evergy has significantly benefited customers and Kansas by improving regional rate competitiveness since 2017, record economic development, reduced overall operating cost and improved electrical reliability. He added Kansas needs additional generation capacity and grid investment to supply enough electricity and build the electrical system infrastructure necessary to serve a generational opportunity in potential economic development and investment in Kansas, creating thousands of jobs and maintain electrical grid reliability particularly in extreme weather conditions.
Mr. Caisley explained Evergy does not want to cause controversy, they want to work with all the other stakeholders and find a common ground that all parties can feel comfortable with for a positive step in the right direction for Kansas.
D. Mitch Robinson, Salina Community Economic Development Organization (Attachment3) who provided testimony in support of the bill. Mr. Robinson added the bill would put Kansas on a much greater competitive footing against Missouri and other neighboring states and change the way a company can account for investment in new facilities that generate and distribute power. He explained growth in energy demand has changed greatly over the past 3 years, projects require more power which means more private capital is needed for these projects.
The conferees responded to questions from committee members.
Chair asked the audience if anyone would like to speak.
Juliet Abdel, President, Senior Vice President Government Affairs, Greater Topeka Chamber who provided testimony in support of the bill.
Proponents - Written Only testimony as follows:
Michael Gavoli, Mid-America Carpenters Regional Council; (Attachment4)
Whitney Damron, Liberty Utility; (Attachment5)
Kevin M. Walker, Overland Park Chamber; (Attachment6)
Russell Kennedy, IBEW Local Union 271 and Bo Moreno, IBEW Local Union 124 (Attachment7)
Kenneth G. Block, Block Real Estate Services, LLC.; (Attachment8)
Stephanie Meyer, Leawood Chamber; (Attachment9)
John D. Quackenbush, JQ Resources, LLC.; (Attachment10)
Katrina Abraham, KC Chamber of Commerce; (Attachment11)
LiUNA Local Union 1290, Construction and General Laborers; (Attachment12)
D. Mitch Robinson, Kansas Economic Development Alliance; (Attachment13)
Ann Smith-Tate, Shawnee Chamber of Commerce; (Attachment14)
Debra Teufel, Hutchinson/Reno County Chamber; (Attachment15)
Nathaniel Hagedorn, North Point Development; (Attachment16)
Juliet Abdel, Greater Topeka Chamber; (Attachment17)
Jeff Fluhr, Greater Wichita Partnership; (Attachment18)
Tim Cowden, KC Area Development; (Attachment19)
Chairperson Delperdang recognized opponents testimony as follows:
Paul Snider, Kansas Industrial Consumers Group (KIC) and Kansans for Lower Electric Rates (KLER) (Attachment20) testified as an opponent on the bill. Mr. Snider added never have they seen such an overreaching attempt to change foundational Kansas utility law and decimate the Kansas Corporation Commission's rate making discretion that is necessary to determine just and reasonable rates for retail ratepayers in Kansas. Mr. Snider explained the Kansas Legislature has been in many important discussions and actions that have brought reductions in the retail rates for ratepayers of Evergy in Kansas and this bill would make Evergy's projected spending significantly more costly for customers.
Justin Grady, Kansas Corporation Commission, (KCC) (Attachment21) testified as an opponent on the bill in its current form. Mr. Grady explained the bill contains four separate sections that each could be separate bills with Sections, 1, 3 and 4 largely policy decisions for the Kansas Legislature and the KCC stand ready to work through concerns they have with those sections as part of a broader stakeholder process. He added Section 2 of the bill should not receive any further consideration and should be struck from the bill entirely, it dramatically and negatively alters the landscape of utility regulation in the State to the direct benefit of utility shareholders and to the direct detriment of utility ratepayers.
David W. Nickel, Citizens' Utility Ratepayer Board (Attachment22) testified as an opponent on the bill. Mr. Nickel explained the bill makes several amendments to Kansas statutes and KCC practices regarding utility rate regulation for Kansas utilities. He added the bill also alters the discounts that may be approved by the KCC under economic development rate schedules which proved discounts from otherwise applicable standard rates for electric service for new or expanded facilities of certain industrial or commercial customer and eliminates tracking mechanisms associated with reductions in revenue discounted rates as well as the requirement that the revenue reductions be deferred to a regulatory asset and rate treatment of the same.
Elizabeth Patton, Americans for Prosperity, (AFP) (Attachment23) testified as an opponent on the bill. Ms. Patton stated the bill is not aligned with AFP's goals of more energy at lower costs and a smarter business and regulatory environment and the language in the bill appears to allow a private company to choose who gets to qualify for economic development rates and once again picking winners and losers.
Glenda DuBoise, AARP Kansas (Attachment24) testified as an opponent on the bill. Ms. DuBoise explained many aspects of the bill are troubling. She added the bill would mandate the return for transmission investment, raising costs to consumers and AARP strongly opposes surcharge rate making as well as construction work in progress cost recovery. Ms. DuBoise said they're overriding concern is that the bill would strip away important powers of the KCC which carefully balance the interest of a utility and its customers to ensure rates will result in a reasonable return on equity for the utility and reasonable cost to Kansas customers.
The conferees responded to questions from committee members.
Opponents - Written Only testimony as follows:
Randy Stookey, Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association & Renew Kansas Bio-fuels Association; (Attachment25)
Eric Stafford, Kansas Chamber; (Attachment26)
Susan Willis, Wichita Public Schools; (Attachment27)
Chairperson Delperdang recognized neutral testimony as follows:
Joe Spease, WindSoHy, LLC. (Attachment28) testifies as a neutral on the bill. Mr. Spease explained there are new hydrogen power technologies that Evergy is not considering that are superior to the natural gas plants, one is CAES/green H2 that offers 12 - 100 hours of storage, makes the most efficient use of green H2 for generating electricity of any technology and produces electricity at rates cheaper than natural gas power. He added Kansas has all the natural assets to support CAES/green H2 projects and the other option is full Siemens Hydrogen Power Plant that would be available by 2026 that runs on 100% green H2 which in this part of the country is cheaper than natural gas.
Neutral - Written Only testimony as follows:
Jason Watkins, Wichita Regional Chamber of Commerce; (Attachment29)
Chair Delperdang asked the committee for any further questions.
Chairperson Delperdang closed the hearing on HB2527.
