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Archive for Sunday, December 1, 2013

Editorial: KCC duties

Remarks by the Kansas Corporation Commission chairman raise some real question about his dedication to the work of the agency and to Kansas consumers.

December 1, 2013

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It seems that Mark Sievers, chairman of the Kansas Corporation Commission, may not understand the core responsibilities of the agency he leads.

The KCC’s mission, as outlined on its own website is “to protect the public interest through impartial, efficient and transparent resolution of all jurisdictional issues.” Key among those issues is regulating rates, services and safety of public utilities.

With that in mind, it’s hard to understand Sievers’ recent assertion that, rather than try to parse complicated cost allocation and rate design studies, the KCC might consider simply assuming that any utility rate increase of less than 10 percent is reasonable and approve.

Perhaps a 9.9 percent increase in electrical, natural gas or other utility rates isn’t significant to Sievers, but many Kansas consumers would disagree.

Sievers’ remarks were outlined in a 15-page document he submitted as part of the recent approval of a rate increase for Westar Energy. Interestingly, Sievers submitted his comments in writing because he was unable to attend the Nov. 12 KCC meeting at which the Westar rates were approved. Although the document was presented as his personal opinion on the issue, it is nonetheless troubling.

“Cost allocation is an imprecise art and not a science — littered with details, and there are times when it is not fruitful to engage in the work effort to do a full-blown cost allocation or rate design study,” he wrote. His remarks apparently are aimed primarily at the Citizens Utility Ratepayer Board, which is responsible for representing the interests of consumers in rate cases. CURB had argued in the Westar case that additional costs shouldn’t be borne by residential and small commercial customers.

Rate studies are used to determine how a utility’s costs should be allocated among residential, commercial and other types of customers. Sievers said he favored bypassing the rate studies and implementing his 10 percent rate threshhold “because it reduces the discretion of advocates and lawyers to engage in unproductive litigation…”

Unproductive for whom? The legal costs in the Westar case were estimated at $75,000, but how can Siever say that wasn’t a good investment for Kansas ratepayers — especially if the alternative is for utilities to gain approval for any rate increase under 10 percent without any opportunity for input or a legal challenge from CURB or another consumer group.

If Sievers thinks that rate studies are an unreliable basis on which to decide rate cases, it is the responsibility of the KCC to demand different or additional information on which to determine whether rate increases are reasonable and justified. Rubber-stamping any increase under 10 percent would be a simple abdication of the KCC’s primary duties. The idea that the KCC chairman would even suggest such a strategy raises real questions about his leadership of this important agency.

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