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Minutes for SB349 - Committee on Utilities

Short Title

Limiting increases on electric retail rates and providing certain exceptions.

Minutes Content for Tue, Feb 15, 2022

Nick Myers, Office of the Revisor of Statutes gave an overview of the bill.  SB349 would enact a new section of law that would impose limitations on the rate increases that the Kansas Corporation Commission (KCC) could authorize in the rate cases of certain electric public utilities. The KCC would be prohibited from approving any requested increase in retail electric rates if such increase would amount to anything greater than a 1% per year increase of retail electric rates. This bill would only apply to the electric public utilities that are subject to KCC jurisdiction, and would not apply to any electric cooperative. Therefore, SB 349 would be applied by the KCC in the rate cases of Evergy and Liberty Utilities.

The Chairman called for proponent testimony.

Oral Proponent Testimony

Paul Snider, testifying on behalf of Kansans for Lower Electric Rates and Kansas Industrial Consumers Group, testified as a proponent of the bill.  He stated the central problem we are having in Kansas is aggressive and excessive spending every time a utility invests money, which then equates to a rate increase for the customer down the road. SB349 is a compromise bill which would allow for rates to get to a competitive level, by establishing a 1% cap on rate increases.  He also stated Evergy and Liberty are monopoly utilities, and something needs to change. (Attachment 1)

Eric Stafford, Vice President of Government Affairs, Kansas Chamber, spoke as a proponent of the bill.  He stated SB349 is a straightforward bill intended to curb Kansas' above average energy prices by stating the Kansas Corporation Commission cannot approve any increase in retail electric utility rates greater than 1% over the previous year's total retail rates.  The provisions expire in 10 years.  He stated rising energy costs have been an issue for several years now among their membership, especially the industrial and manufacturing segments.  "We are not operating in a free market with open competition."    (Attachment 2)

Elizabeth Patton, Kansas State Director, Americans for Prosperity (AFP), spoke as a proponent of the bill.  She stated electricity rates can be a key driver of energy poverty - even a one cent per kilowatt-hour change in residential rates could cost (or save) the average Kansas household over $100 per year.  According to one estimate she cited, over 60,000 Kansas households have incomes of 50 percent or more below the Federal Poverty Level and pay 29 percent of their annual income simply for their home energy bills. "AFP believes we should strive to let the market deliver the right mix of energy at the lowest cost; we support energy policies that are fuel and technology neutral."  (Attachment 3)

Dana Wreath, Executive Vice President, Berexco LLC, spoke as a proponent of the bill.  He stated top line economic growth in Kansas has been slower than in all nine peer states since 2010, included in an analysis provided in his testimony.  "It appears that electricity rates in Kansas likely contribute to such under-performing economic development, including business attraction and retention."  (Attachment 4)

Written Proponent Testimony

Randy Stooky, Senior Vice President of Government Affairs and General Counsel, provided joint written testimony for Kansas Grain and Feed Association, Kansas Agribusiness Retailers Association, and Renew Kansas Biofuels Association.  (Attachment 5)

The Chairman called for a period of questions and answers.

Seeing no more questions, the Chairman called for neutral oral testimony.

Neutral Oral Testimony

David Nickel, Consumer Counsel, Citizens' Utility Ratepayer Board (CURB), provided neutral oral testimony on the bill.  He stated CURB wants the lowest possible rates for the customers, but SB349 does not eliminate, but merely postpones rate increases. Their concerns also include: 1. The bill may impermissibly limit recovery of transmission deliver charges. 2. The bill could result in rate shock and additional costs for consumers. 3. SB349 effectively does little to lower utility rates.  4. Evergy agreed to a rate case moratorium which is about to expire, and the bill could limit their ability to recover deferred costs. (Attachment 6)

Zack Pistora, Legislative Director and State Lobbyist, Kansas Chapter of Sierra Club, provided neutral oral testimony.  He stated while the spirit of the bill is well intentioned, the Sierra Club can't support it because they don't have a position on what a "fair rate" is, and there isn't a clear path toward achieving the goal.  He stated Evergy should seek to replace all of its coal capacity with clean energy sources.  (Attachment 7)

There were no questions for the neutral conferees.

Opponent Oral Testimony

Chuck Caisley, Senior Vice President, Public Affairs/Chief Customer Officer, Evergy, provided opponent testimony on the bill.  He stated in response to proponent testimony, that Evergy was not always a monopoly, but the state made them one many years ago.  "We are in an unprecedented time of closing down of fossil fuel plants, which means supply is getting much less", and that raises costs.  He mentioned there is no rate cap like this in the United States, and there have only been temporary caps with a limited purpose in the past.  He stated the bill was bad public policy on a number of fronts, and what it will actually do is increase rates later. (Attachment 8)

Because of time constraints, the Chairman concluded oral opposition testimony for today, and opened for questions of Mr. Caisly.  The remainder of opponent testimony from Justin Grady and Whitney Damron will be held tomorrow, February 16, 2022.

After a period of questions and answers, the Chairman adjourned the meeting at 2:30 pm.