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Minutes for SB279 - Committee on Energy, Utilities and Telecommunications
Short Title
Concerning the gas safety and reliability surcharge.
Minutes Content for Wed, Mar 14, 2018
The chair opened the hearing.
Nick Myers, Assistant Revisor of Statutes presented an overview of the bill. (Attachment 1) The bill amends K.S.A. 66-2202, 66-2203 and 66-2204 of the gas safety reliability policy act relating to the gas system reliability surcharge (GSRS). The bill amends definitions used in the act, which qualifies as an eligible project for GSRS cost recovery, and GSRS caps and charges. He stood for questions.
Rick Grundman presented testimony in favor of the bill. (Attachment 2) Kansas Gas Service did not make the decision to request legislation without a great deal of internal debate and discussion. The bill would change existing law by allowing for the recovery of the following. Investments made in accordance with the utility's safety and risk management programs, which are reviewed by the Kansas Corporation Commission and required by the U.S. Department of Transportation Pipeline and Hazardous Materials safety Administration (PHMSA); System security costs to protect both physical and cyber assets; Inclusion for recovery of the cost of replacing meters in a GSRS filing; and An additional surcharge of $0.40 per residential customer per month, bringing the maximum surcharge to $0.80 per residential customer per month. As a regulated utility, they appreciate the regulatory process and the relationships they have built over many decades at the Kansas Corporation Commission (KCC). Their proposals have been shared with the KCC staff and Citizens' Utility Ratepayer Board (CURB) and the amendments made in the Senate Utilities Committee addressed two issues they raised, and they believe this bill promotes positive changes which balance the needs of the stakeholders. He stood for questions.
Bart Armstrong gave proponent testimony for the bill. (Attachment 3) He indicated that Atmos Energy's vision is to be the safest provider of natural gas service in the nation. To achieve that vision, their strategy is to operate their business exceptionally well, to invest in their people and their infrastructure, and to enhance their culture. They support the bill as amended in the Senate Utilities Committee. Atmos Energy appreciates the KCC, Staff and CURB's efforts to explore innovative ways to improve pipeline safety in Kansas. This bill is a good step, and they are committed to collaborating with their regulators to pursue additional solutions that balance the goal of investing in the safety and reliability of their natural gas system with affordable rates for their customers. He stood for questions.
Bob Amdor testified in favor of the bill. (Attachment 4) Black Hills Energy is a natural gas utility proudly serving approximately 113,000 customers in 65 Kansas communities. They believe this bill will provide regulatory certainty in accelerating the replacement of aging infrastructure and the timely recovery of those costs, while keeping customer impacts in mind. The proposed changes in this bill are necessary to allow Black Hills to recover costs from eligible system infrastructure investments which are being significantly increased above the $8.3 million level, the current cap for Black Hills. The changes update the static residential customer cap which is now 12 years old and excluded any type of adjustment for inflation or proactive investment. He stood for questions.
The Chair closed the proponent portion.
Leo Haynos presented neutral testimony. (Attachment 5) Given the amount pf obsolete gas piping that may need to be replaced, Staff would prefer that these two new categories not be included in the proposed bill. Staff's preference is based on a desire to ensure that the entire amount of the $0.80 GSRS cap is spent on replacing obsolete piping. More specifically, (1) capital expenditures for cyber security can be significant and our interpretation of the bill is that it would allow any capital costs for cyber security to be flowed through the GSRS, and (2) the utility's self-defined safety and risk management program costs are not well defined and have the potential to be significant because the cost category could be overly broad. He stood for questions.
The Chair closed the neutral portion.
David Nickel presented opposition testimony. (Attachment 6) The gas utilities may urge quick passage of the bill out of alleged necessity to avoid danger to Kansas citizens. Yet, the truth of the matter is that these Kansas utilities have waited for years to repair or replace their pipelines. Indeed, the utilities boast that their pipelines are safe and that there is no known immediate danger to persons or property emanating from the conditions of these pipelines. Thus, there is no reason to hurry legislation when additional time could yield very reasonable results. He stood for questions.
Paul Snider presented opposition testimony. (Attachment 7) KICG does not believe the bill and its recommended changes are in the best interest of consumers. The amendments to the GSRS are exceedingly broad. Historically,the GSRS surcharge only applied to costs related to pipeline replacements required under state and federal pipeline safety regulations, along with relocations caused by right of way projects. The new language lets the gas utilities use it for any new investments in between rate cases. In addition, this bill would double the amount and single GSRS filing can increase rates - increasing the cap from 10% to 20% the utility's base revenue level. He stood for questions.
Written Only Opponent testimony was provided by Ernest Kutzley, AARP. (Attachment 8)
The Chair closed the opponent portion then subsequently closed the hearing.
The next meeting will be Wednesday, March 21.
The meeting adjourned at 10:20 am.
