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Minutes for SB198 - Committee on Utilities
Short Title
Authorizing the state corporation commission to issue securitized ratepayer-backed bonds for electric generation facilities.
Minutes Content for Tue, Mar 12, 2019
Chairman Masterson waived the explanation SB198 by staff. Staff did provide for members (written only) the memorandum for SB198.(Attachment 6)
Proponents
Ashok Gupta, Natural Resources Defense Council provided testimony in support of this bill. He said, what you have before you in SB198 is a solution-a tool-to help utilities, regulators and policymakers transition to less expensive resources while dealing with undepreciated regulatory assets. This tool, called securitization or ratepayer backed bonds (RBBs), is not new or controversial. SB198 creates an opportunity for Kansas to take advantage of low-cost ratepayer backed bonds to help consumers and to help manage transitions for utilities.(Attachment 7)
Zack Pistora, Kansas Sierra Club stated the proposed bill offers a voluntary opportunity to help utilities refinance their assets and realize savings for consumers. It is important to realize that securitization is a tool, not a mandate. SB198, and the resulting securitization bonds, represents a new element of flexibility in electric utility regulation. It is of vital importance for the Legislature to provide thoughtful direction and policy authority to the KCC to prioritize a commitment to Kansas ratepayers, and give utilities an extra tool to tackle this problem. (Attachment 8)
Opponents
Whitney Damron, Liberty Utilities stated that securitization of an asset is not new or unique to utilities. However, legislative initiatives introduced throughout the country in the past few years similar to SB198 not only would create an ability for a utility to decide whether securitization made economic sense for the company and its customers (voluntary securitization), but would also create a process where securitization could be imposed upon a utility irrespective of its financial conditions, investment strategy, financing options, energy mix and any number of other factors that a utility must factor into any decisions for investment and asset management (involuntary securitization). A forced securitization would disrupt the regulatory compact between utilities, regulators and rate-recovery mechanisms and discourage utility investment in the state.(Attachment 9)
Chuck Caisley, on behalf of Westar Energy and KCP&L said that this bill proposes to use securitization for three specific purposes: (1) the retirement of coal generating facilities; (2) re-training and workforce development for employees displaced by retirement of coal generating facilities; and (3) construction of renewable generation facilities. These are not common uses of securitization, and workforce re-training and renewable generation are unprecedented applications of securitization in the U.S.(Attachment 10)
Richard Goucher, AARP spoke for Ernest Kutzley in opposition to this bill. He stated that they believe it is harmful to Kansas Ratepayers. They support full regulatory review of utility expenditures. This bill creates a new long-term cost for ratepayers that cannot be changed nor reviewed by the KCC.(Attachment 11)
Neutral:
Justin Grady, Kansas Corporation Commission stated that Staff's concerns with this legislation fall into three main categories:(Attachment 12)
- Securitization has not yet been sufficiently studied in Kansas to know whether this particular version of securitization legislation is the optimal result for the State;
- The bill appears to presuppose that there are generation units in the State that are ripe for early retirement, resulting in savings for the State's ratepayers-which has not yet been studied or determined; and
- The language in the full bill focuses almost exclusively on the concept of "least-cost", generation, which is a term that is too narrowly focused because it does not consider the stability of the grid and a utility's broader obligation to provide reliable, efficient and sufficient service.
Written only testimony:
Dorothy Barnett, Clean Energy Business Council - Proponent;(Attachment 13) Randy Stookey, Renew Kansas & Kansas Feed and Grain-Proponent:(Attachment 14) Paul Snider, Kansas Industrial Consumers Group-Neutral;(Attachment 15)
Chairman Masterson closed the informal hearing on SB198.
Next meeting March 19, 2019 for Possible action on bills previously heard
Adjourned 2:30pm
