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Minutes for SB339 - Committee on Energy, Utilities and Telecommunications

Short Title

Allowing the state corporation commission to approve certain electric contract rates and associated cost recovery from all rate classes.

Minutes Content for Thu, Mar 12, 2020

Chairperson Seiwert opened the continuation of the hearing on SB339 at 9:05 am. Technical difficulties prevented audio recording of the first twenty-seven minutes of the session.

Proponents providing oral testimony included:

  • Paul Snider represented Kansas Industrial Consumers Group (KIC) who supports the bill. KIC core companies represent 40% of the Evergy Central (formerly Westar) load. Rates are a factor for bringing in companies, and some companies are leaving. While customers would have to pay Evergy for the offered discount, KIC believes benefits of new load outweigh the cost, which would be considered on future rate cases. Under this bill, the Kansas Corporation Commission (KCC) is authorized to approve contract rates to retain and attract extremely large industrial customers and allows for standardized economic development rates to attract certain high-value customers.(Attachment 1)
  • Mitch Robinson said Kansas Economic Development Alliance (KEDA) supports SB339 as a tool to help level competitiveness within economic development recruitment, specifically between Kansas and Missouri for large-scale data centers, aviation, food processing, and advanced manufacturing industries. Companies consider all the factors in making an evaluation behind a decision. Kansas has been at a disadvantage. This bill aligns Kansas and Missouri economic development rates (EDRs) and the special contract rate will not impact other customers. (Attachment 2)
  • Jessica Lucas represented the support of SB339 by the Wichita Regional Chamber of Commerce who believe the bill will make Kansas more competitive and successful in growing the manufacturing sector in the region and across the state. (Attachment 3)

Oral Proponent testimony ended at 9:28 am.

Proponent written only testimony was submitted by:

Representative Schreiber requested Chairperson Seiwert allow Darren Ives to speak about special contracts.

  • Darren Ives, Vice President of Regulatory for Evergy, stated he would respond to questions raised earlier indicating unilateral control of economic development and special contract rates does not reside with Evergy. The presenter responded to questions from the committee. Discussion ensued.

Chairperson Seiwert opened the Opponent testimony at 9:38 am.

Opponents providing oral testimony included:

  • Jeff McClanahan stated the Kansas Corporation Commission (KCC), while opposed to this bill, is not opposed to economic development rates. KCC analysis indicates SB339 does not comport with LEI recommended key considerations in designing economic development riders or with Kansas Corporation Commission (KCC) competitive discounting criteria. The conferee responded to questions from the committee. Discussion ensued. (Attachment 11)
  • David Nickel stated Citizens Utility Ratepayer Board (CURB) believes the Kansas Corporation Commission (KCC) already has the authority to issue economic development and contract rates but SB339 says shareholders will bear none of the risk. CURB believes KCC needs authority to render some type of sharing mechanism to balance the interest between the ratepayer and the shareholder. Special contract rates are discriminatory, a border war is possible, there is no incentive as long as ratepayers would be supporting the sale of something below the margin. Language directing the KCC to always look at whether the economic development tariffs are in the public interest should be in the bill. CURB recommends waiting on the second phase of the rate study and taking more time and work to make a better bill. The conferee responded to questions from the committee. Discussion ensued. (Attachment 12)

Oral Neutral testimony was provided by:

  • Leslie Kaufman indicated Kansas Electric Cooperatives (KEC) is neutral on the underlying bill as it stands now, but is supportive of previously added amendments that protect the ability of KEC's members to self-regulate customer rates under the current statutory framework. (Attachment 13)

Chairperson Seiwert closed the hearing on SB339 at 10:12 am.