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Minutes for SB145 - Committee on Utilities

Short Title

Allowing the state corporation commission to regulate the rates of boards of public utilities after a customer petition.

Minutes Content for Mon, Feb 18, 2019

Chairman Masterson opened the hearing on SB145

David Haley, Senator, gave testimony on SB 145 in support of the bill.(Attachment 2)

He said that he would be speaking as a citizen legislator.  He stated that this bill is necessary to provide oversight for thousands of ratepayers.  This bill affords the utility opportunities for precedent rulings or guidelines.  My role here is to reflect once again the genuine desire from thousands of Wyandotte County ratepayer-residents to have answers for legitimate issues and questions that continue to come up from our solo "take-it-or-live-without-electricity-or-water" utility.  He then stated that he had an amendment he would like to present.

Chairman Masterson asked if he wanted to attach the amendment to his testimony. 

Matt Sterling, staff revisor, explained the amendment.(Attachment 3)

Members asked Mr. Sterling questions on the technical aspects of the amendment. 

Senator Haley answered questions from the members.

Colin Hansen, Executive Director, Kansas Municipal Utilities spoke in opposition to the bill.(Attachment 4)

Mr. Hansen said that KMU strongly opposes SB145 which would remove local control of rate setting authority from municipal boards of public utilities under petition circumstances.

Local Control:  The core principle driving all municipal utilities is control and oversight of their operations by a locally-elected council, commission or board. 

Cost:  He stated that we believe the cost to municipal utilities, and ultimately their customers, would increase significantly if rates would be required by a petition to be approved by the Kansas Corporation Commission.

He concluded by saying that KMU strongly urges the committee to oppose SB145 and to allow the local issues of any community-owned utility, large or small, to be handled through the appropriate local representative process.

Kasi Morales, Key Accounts Manager for McPherson Board of Public Utilities gave testimony in opposition to SB145. (Attachment 5)  She stated that McPherson Board of Public Utilities (MBPU) is a municipal utility that was created by the City of McPherson and is charged with the responsibility for providing water and electric service.  She continued by saying that McPherson BPU's business model, of local control, has been extremely successful and very beneficial to McPherson and the surrounding area. 

In addition, MBPU has very competitive rates.  The utility continues to see increased sales when most electrical utilities are seeing the opposite.

Scott Glaves, General Manager for Clay Center Public Utilities spoke in opposition to SB145.(Attachment 6)  He stated that Clay Center Public Utilities is a municipally owned utility that was formed as a Board of Public Utility (BPU) and is charged with the responsibility of providing water and electric service to its citizens.  All utility revenue comes from electric and water sales. 

Mr. Glaves continued by saying at the Clay Center Public Utility Commission, we pride ourselves on our accessibility and accountability.  Our utility has a long-standing reputation of running a "tight ship".  He also says that Clay Center has very competitive rates. 

In conclusion SB145 would add another form of regulation on top of what our two local forms of governance currently provide.  Clay Center BPU is already accountable to the community it serves with multiple democratic opportunities for community engagement.

Mike Taylor, Public Relations Director, Unified Government Public Relations opposes SB145 because it takes away local control from citizen customers of the Kansas City Board of Utilities, replacing it instead by intervention by an unelected statewide commission.(Attachment 7)

Mr. Taylor said that SB145 is a knee-jerk proposal which has failed to take into account how shifting a role in potential oversight to the KCC may affect outstanding bonds issued to finance the utility. 

In closing he stated the Unified Government supports the ability of cities to operate municipal electric, water, sewer, storm water, and other services.

Chairman Masterson called Don Gray.  David Mehlhaff, Chief Communication Officer for Kansas City BPU spoke in his place.  He stated that Mr. Gray was sick and could not be here.(Attachment 8)    Mr. Mehlhaff stated that he was familiar with the testimony.  He testified in opposition to SB145 saying it would remove local control of electric utility rate setting from BPU's elected board and place it under the authority of the Kansas Corporation Commission.

BPU operates and maintains all aspects of utility delivery to its customers, from electric power production, to transmission and distribution, delivering highly reliable, safe and efficient electric service to its customers on demand, around the clock.

Mr. Mehlhaff concluded with BPU's purpose is simple, to provide dependable utility services at the lowest possible price and to improve the quality of life in the community it serves.   We have taken positive steps to decrease costs, improve efficiencies, increase customer satisfaction, improve oversight and accountability, and hold the line on rate increases.

Chairman Masterson asked  members if they had questions for any of the conferees.  David Mehlhaff answered questions.

Jeff McClanahan, Director, Utilities Division, on behalf of the Kansas Corporation Commission testified as neutral on SB145.(Attachment 9)

Mr. McClanahan stated as proposed by SB145, the authority conferred on the Commission to determine whether the rates set by a board of public utilities are just and reasonable is based on a petition signed  by not less than 5% of all the board's customers or 3% of the board's customers from any single rate class.

He took questions from members and answered all questions.

Chairman Masterson closed the hearing on SB145 

Next meeting is February 19, 2019

Meeting adjourned at 2:31pm