Topeka Advocates for consumers and the elderly squared off against natural gas utilities on Monday over a bill that would allow the utilities to increase their rates before they are approved.
“House Bill 2512 turns the entire Kansas legal framework backwards,” said David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board.
“A utility, without proof, can charge a level of rates that will most likely be deemed unjust and unreasonable at a later date,” Springe said.
Currently, if a utility wants a rate increase, it files the request with the Kansas Corporation Commission, which has up to 240 days to review the request and issue a decision.
HB 2512 was heard by the House Energy and Utilities Committee, which took no immediate action on the proposal.
Under the measure, a natural gas utility would be allowed to charge customers the requested rate increase starting 30 days after the utility files the request with the KCC. If the KCC approves a smaller increase than the utility requested, the utility would then refund to customers the difference, plus interest.
Representatives of natural gas utilities said the measure would make regulation more efficient and encourage investment in Kansas.
Because it can take up to eight months to approve new rates under the current process, there is a “regulatory lag,” said Vance Crocker, general manager of Kansas Natural Gas Operations for Lawrence-based Black Hills Energy. Under the current system, once new rates take effect “they are already stale,” he said, and that makes it more difficult for investors to recover profits.
This proves to be a disincentive in attracting capital investment to Kansas, he said. Crocker said interim rates are allowed in Nebraska, Iowa and South Dakota. If Kansas passed the proposal, he said, the state would be seen as having a better regulatory climate.
The Kansas Corporation Commission is neutral on the bill. Tom Day, legislative liaison with the KCC, testified that there are several mechanisms already in effect that reduce “regulatory lag.” And Day said the KCC also has made changes to reduce the processing time of rate requests.
David Wilson, speaking on behalf of AARP Kansas, said, “Rather than make energy service more affordable, HB 2512 makes it less so, by turning Kansas law on its head and allowing immediate rate increases.”
Wilson said although the bill applies only to natural gas utilities, if it is passed then electric utilities will seek legislation that would allow them to charge interim rates.