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Minutes for SB69 - Committee on Energy, Utilities and Telecommunications
Short Title
Requiring an electric rate study of certain electric utilities.
Minutes Content for Tue, Mar 19, 2019
The chair opened the hearing. Nick Myers, Revisor of Statutes office gave a brief of the bill. (Attachment 10) He stood for questions.
Bruce Graham presented proponent testimony. (Attachment 11) He stated as a member of the group brought together in the Senate to work out language that could be included in a study of electric utility issues, he spoke for the electric cooperatives in support of the list of topics in the bill. The bill reflects a compromise between the proponents and opponents. There are no limits in the bill on the total dollars that could be expended on the study. Obviously, a blank check worries the 28 not-for-profit electric cooperatives that will be subject to more that 20 percent of the cost of the study.
Kevin Bryant gave proponent testimony. (Attachment 12) He indicated that the agreed-to compromise language in the substitute bill that passed out of the Senate is much improved over the original bill and has Evergy’s support. Importantly, this bill does not change regulatory law, but initiates a study to look for solutions. In addition, unlike the original draft, this bill supports the interests of all of Evergy’s customers, including commercial and industrial as well as small business, schools, universities and residential customers. Evergy supports that process which has proven over time to be fair for all. Special consideration for one class at the expense of another necessarily means rates will decrease for some and increase for others.
Kimberly Svaty provided testimony in support of the bill.(Attachment 13) She indicated there is no greater model for the public interest than democratic governance, and that is what Kansas municipal utilities have been providing for more than a century. They understand the current interest in electric rates in Kansas, which is why they support legislation that can both study the unique situation that exists right now and learn from all the electric utilities in Kansas as to how their rates are set. She respectfully asked for favorable consideration of the bill.
Jessica Lucas presented proponent testimony. (Attachment 14) She stated that every single stakeholder in the room - Representatives, clean energy advocates, their industrial partners, CURB, the KCC, the utilities, cooperative, municipalities and others should take this study and come together as a part of a robust and transparent stakeholder engagement process to form a Kansas Energy Plan. That plan should put the state on track to responsibly, fairly and efficiently plan for the future energy needs in a way that is mindful of costs and benefits.
Paul Snider presented proponent testimony. (Attachment 15) He indicated the bill builds on the KCC rate study, presented earlier, by addressing issues not previously analyzed. Importantly for Kansas consumers, the bill will provide the Legislature with solutions to consider regarding the best ways to make Kansas electric rates competitive. The language in the substitute was arrived at through extensive discussions between several consumer and utility stakeholders. The path to this agreement was not easy. The stakeholders had different interests and priorities, but were all motivated by a universally shared desire to have reliable utility service at fair, reasonable and competitive rates.
Written only proponent testimony was provided by: Randy Stookey, Senior Vice President, Government Affairs, Kansas Grain and Feed Association (KFGA), Kansas Agribusiness Retailers Association (KARA) and Renew Kansas (Attachment 16); Gavin Kreidler, Kansans for Lower Electric Rates (KLER) (Attachment 17); Dennis George, CEO, Associated Purchasing Services, Inc. (APS) (Attachment 18); Eric Stafford, Vice President, Government Affairs, Kansas Chamber of Commerce(Attachment 19); Rabbi Moti Rieber, Executive Director, Kansas Interfaith Action (KIFA) (Attachment 20); Tom Powell, Chief Legal Counsel, USD 259 Wichita Public Schools (Attachment 21); Jeff Glendening, Kansas State Director, Americans for Prosperity Kansas (Attachment 22; Todd Love, Attorney, Citizens Utility Ratepayer Board (CURB) (Attachment 23) and Adam Pogue, Vice President, Manufacturing Services, Spirit Aerosystems. (Attachment 24)
Chair Seiwert closed the proponent portion of the hearing.
Neutral testimony was presented by Jeff McClanahan. (Attachment 25) He stated the staff of KCC anticipates that the rate study envisioned in the bill could be very expensive due to the depth and breadth of the individual issues to be evaluated. The fiscal note estimates the rate study as proposed under the bill will cost approximately $1 million to complete. Per section 1(b)(5) of the bill, the utilities subject to the rate study are to pay for the rate study through an assessment of expenses pursuant to K.S.A. 66-1502. However, the ratepayers of the utilities included in this study will ultimately pay the cost of the study. The primary reason the rate study could be expensive is due to the wide-ranging scope of subjects to be evaluated, some of which could justify their own discrete study. He stood for questions.
The Chair closed the neutral portion.
There was no opponent testimony. The Chair closed the opponent portion and subsequently closed the hearing.
Tom Day, Director-Legislative Administrative Services (LAS), made the following comments in response to Representative Schreiber’s request to explain the Request-For-Proposal (RFP) process as it pertains to Sub SB69.
The Legislative Coordinating Council (LCC) shall choose one or more independent consultants to study the electric rates in Kansas. The first question that came up in SB69 and Sub SB69 was what is “independent?" Is the consulting firm independent if they have not done work for any Kansas utility, the Kansas Corporation Commission (KCC), or any intervenors appearing in cases before the KCC? The term “independent” needs to be clarified as to its intent. The cost of the study will probably exceed $1,000,000 due to the compressed time-frames required in the bill. The shorter the time-frame for consultants to perform the required work increases the likelihood that the cost will increase accordingly. Other studies have been completed on Westar and KCP&L, and this bill adds municipalities and electric cooperatives, as well as investor-owned electric utilities, to the rate study.
If the bill passes, and once published in the Kansas Register, the LCC will most likely task the Director of LAS and the Revisor to develop the RFP using the parameters laid out in the bill for the rate study requirements. Once the RFP is approved by the LCC, it would be sent to qualified consultants. Anticipating at least three (3) meetings of the LCC to meet, approve RFP, choose one or more consultants, develop contract with the assistance of the Revisor, and have the contract signed. The time from the publication in the Register to the signing of the contract could take until July 2019.
The meeting was adjourned at 10:19 am.
