David Springe is the consumer counsel for the Citizens’ Utility Ratepayer Board, which advocates for Kansas residents when utilities want to raise rates.

Sigmund

David, I would like to thank you and your staff personally for the part you played in uncovering the fraud committed at the highest level of Westar. Excellent work!

Sticking with Westar for my question. If you have followed various stories at the LJW there is a lot of frustration with the electric service here in Lawrence. It seems that large areas of town are without electricity every time the there is a drizzle or it gets cloudy. Some have even coined the phrase “severe drizzle” to describe Westar’s customer service explanation of why the power is out. Is there anyway your office could help to insure or impose some form of Service Level Agreement (SLA) upon Westar that would require them to provide consistent electric power to their customers or face a decrease in their revenues? Being a captive customers of the only electric utility available there doesn’t seem to be much a individual ratepayer can do.

Moderator

Good afternoon everyone. Welcome to today’s online chat with David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board, which advocates for Kansas residents when utilities want to raise rates. I am Dennis Anderson, managing editor of the Lawrence Journal-World. I will be moderating today’s chat. Welcome, David.

David Springe

Thank you for having me.

Displayhawk

How come public utilities ALWAYS get a rate increase approved??? It may not be as much as what they want, but they always get something. It’s human nature to figure that if we ask for $2 and get $1, the next time we will ask for $4 and get what we originally wanted. I guess my question is why they don’t get turned down flat once in awhile???

David Springe

In fact, utility rate increase do get turned down occasionally. And you are correct, most requests to increase rates are reduced by the Kansas Corporation Commission. My agency plays a role in getting rates reduced. By law, a public utility is allowed to recover its expenses and make a return on its capital for investors. The question is what is the appropriate level of expenses, and how high a return for shareholders. Its not surprising that the utility thinks it needs a higher return for shareholders, and therefore asks for more. My agency thinks shareholders need less, and we’ll argue to lower rates. The KCC Commissioners must decide who is right. One other point, the KCC by law must restrict its decision to the evidence in the record. The can’t just say no without evidence to support that decision.

David Springe

Sigmund
Your question is at the top of my page, I don’t know where this answer will end up. Thank you for you comments about the old Westar proceeding. While I’d like to take all the credit, there were alot of other parties involved in the case and the KCC Commissioners really came down hard on the Company. That said, that was several years ago and Westar is under new management that appear to be improving the company. Have you reported your service quality issues to the KCC? You are correct, that your power should not be affected by every “severe drizzle”. If you will send me an email with your particulars, I’ll see what I can find out. D.springe@kcc.state.ks.us

Moderator

FYI: We had a few questions about water and sewer issues. CURB doesn’t work on those concerns, which should be taken up with the City of Lawrence.

johngalt

Will wind energy ever be able to make it on its own without massive subsidies?

David Springe

Johngalt. Wind energy is a tough question. Whether it “ever makes it own with massive subsidies” depends on alot the cost of the technology, which is improving each year, and the cost of the alternatives it is competing against. There is alot of argument about what the “cost” of wind energy is. I would say that in simple dollars wind is slightly more costly right now. However, if environmental concerns and health concerns are considered, that changes the economics. As you look out on the horizon, it is not unreasonable to expect some sort of carbon tax, which again makes wind more “cost effective” than the alternatives. So will wind ever not need subsidy….my guess is yes. On the other hand, I’m not sure some subsidy right now is a bad thing to help wind along. It should be part of a balanced portfolio of generation resources, especially when many of those generation resources being built right now may last 40-50 years into the future.

context

Does C.U.R.B. ever agree to a rate increase? What kind of justification is acceptable, in your view?

David Springe

Context, Yes, CURB does agree to rate increases. My agency hires consultants to review the expenses and return the utility is requesting. We will then file testimony on what our analysis suggests is a proper rate increase. In some instances we recomend rate decreases, like the most recent Westar rate case. As part of the trial process, we have to recognize that the KCC Commissioners decide the case, and they have never agreed with our testimony 100%…meaning, we’re going to lose some issues in the case. Depending how far apart CURB, the KCC staff, industrial customers or other intevenors are, it is possible a settlement can be reached. For example, Aquila filed last week to incease its gas delivery rates in Kansas by $7.2 million a year. Aquila’s last gas rate increase was $2.7 million two years ago based on a settlement that CURB supported. So, that is a long answer to say yes, we do, based on evidence in a record and our litigation risk sometime settle cases that result in rate increases. Other cases we litigate. We fought Westar’s last increase, lost at the KCC, and won at the Kansas Court of Appeals.

consumer1

Thank you for taking my question and thanks for your great work on the westar scam. I live in a neighborhood which was developed in the 70’s. The electricity there goes out at least twice to three time per month. Same with my girlfriends neighborhood across town, (same age of houses). I don’t really understand much about the grid system, but am wondering with rates always increasing, why can’t the older grids be improved. It seems to me, we just continue to finance new building

David Springe

Consumer1. The Westar system should not have routine outages. As I mentioned to Sigmund, send me an email with your particulars and I’ll see what I can find out.

Displayhawk

Why isn’t there a provision for Senior Citizens who are in a certain tax bracket and below, allowed a reduced rate??? My parents are on a fixed income, and utility increases are a major strain on them. Realize that a lot of Senior Citizens use blood thinners, so they have to turn up the heat this time of year just to stay warm!

David Springe

Displayhawk. Great question. The KCC had an investigation last year about the legality having a low income rate or a senior citizen rate. CURB filed extensive comments that said we thought such a rate would be legal. The KCC decided otherwise, finding that this sort of rate is not allowed by current law. Now, that is something that can be easily changed by the legislature. But, every discount that is given to a senior citizen must to be paid for by other customers, so there is a policy question that must be answered. How to help low income ratepayers and senior citizens is being discussed at the state level right now. The Kansas Energy Council (http://kec.kansas.gov) has draft policy recomendation and is currently accepting public input. The KCC has opened an investigation is to whether, as part of utility service, conservation and energy efficiency products should be provided. The legislature will probably weigh in on this issue to this session. Even Aquila, in its rate increase request is asking to charge its customers about $5 per year to fund rebates to incent customers to install more efficient furnaces and water heaters. I don’t think a low income or senior citizen rate is out of the question right now. It would be a good question for you legislators. You can check our website too, we try to keep it up to date on some of these issues. (http://curb.kcc.state.ks.us)

Packman

David,

What is CURB’s stance on new coal-fired power plants in Kansas. While coal appears to be the cheapest form of electrical power today, will it continue to be so in the future if a carbon tax (or similar policy) comes into play and the rail-roads continue to have issues that may jack up the delivered price of coal?

David Springe

Packman, I’m not really for or against coal plants. The reality is demand for electricity continues to grow. Power generation, of some form or other, is going to have to be built. As Sigmund and Consumer1 will attest, people are not happy when the power goes out. Also, we have not built alot of large generation plants in a number of years so some are going to have to be added to the system in the near term. As part of a portfolio of generation resources, coal has a place. Of course, so does natural gas, wind, biofuels, energy conservation and probably sometime in the future, more nukes. The real question is, what is the right mix of resources to meet the demand, can resources be spent to help reduce demand, and should we invest in technology (carbon sequestration and mercury scrubbers on coal plants) that is cleaner, but perhaps more expensive in the near term. Again, the Kansas Energy Council is debating this very issue, and Rep. Tom Sloan from Lawrence sits on the House Utilities Committee and is a big supporter of this concept. It will likely come up in the legislative session this year. Like the other issues I discussed above, energy policy, both at the supply and demand level is a huge topic right now at many levels in the state. I urge all citizens to participate in this process and make your views known.

Moderator

We’ve run past our scheduled time. I want to thank the readers for their questions, and David for his answers. Please come back again.

David Springe

I’d like the thank the Journal World for having me in for a chat today. If anyone has further questions please feel free to email me or call the agency at 785-271-3200.