Climate and energy

Summary: (to be filled in later)

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Gaveled in. Subcommittee meeting today at noon in 785 Docking – KETA legislation on transmission.
7:30-8:30 Monday morning for net metering subcommittee as well (ack!)

Hearing opens on HB 2035

Melissa Dublin briefs HB 2035. Bill redefines rural electric cooperative and thus effects who is regulated by KCC (MH  remembers this from the coal bill SB 148 last year). Large rural electric co-ops can choose to exempt themselves from regulation by KCC.

Proponents

Stuart Lowry, Kansas Electric Cooperatives
This bill amends law on books since 1992. Bill does not deregulate any co-op. Gives members of co-op ability to vote that co-op gets limited deregulation from KCC. If members choose exemption they can set their own rates, and members if unhappy can petition to have rates reviewed by KCC. 3% of ratepayers can ask to have rates reviewed, low threshold, a protection in the bill. Law would also allow G&T co-ops to submit deregulation question to their membership. Right now only retail co-op can ask for deregulation.

Opponents

David Springe, CURB
We do oppose this bill. Removing 15,000 customer threshold for deregulation opens up almost every co-op in state. This threshold was put into law because expense of KCC process hurt small co-ops, but it helps protect customers of larger co-ops who can afford it. We don’t get a lot of calls at our agency, unfortunately most consumers still don’t know we are a resource, but most of the calls we do get are from customers of deregulated munis or co-ops. They have nowhere else to turn, but I can’t help them. These customers need due process protection for their rates. Under the existing law you have never had a rate appeal filed, which leads me to believe either rates for co-ops aren’t that high, or that the law doesn’t work. If you do pass the law, the consumers need to also know that they CAN appeal to petition for review of rates – they need to know consumer appeals process for rate review. But we don’t recommend passing law.

Tom Thompson, Sierra Club
HB 2035 was learning experience for me, the difference between all the co-ops. Sierra Club opposes this bill because it allows co-ops to become exempt from KCC. For customers who don’t like the situation, it’s harder to appeal. KCC acts as a balance for customers’ rights. Sunflower Electric is also in process of trying to build coal plants in Holcomb. This decision will affect their customers’ rates. There are lots of unanswered questions about those costs. This is not the time to exempt their consumers from protection. As carbon dioxide starts to increase and costs to produce, this will also cost their consumers. The KCC will be important protection for these consumers and maintain checks and balances.

Questions?

Rep. Kuether for David – Q: How long does appellate process take for members, if they are not happy? A: They have up to year to appeal rate change to KCC, but nothing in law restricts KCC in timeline of its review. There is no 240 day clock. Stuart – it follows same procedure. David – not sure the law is clear on that. Stuart – the law you are considering does not address timeline. My belief is that once petition arises we follow the same timelines, etc., as any other regulated utility. Q for Stuart: do you mind if we put that language in the bill? A: No.

Rep. K for Stuart – Q: Obviously Sierra raised some questions about bill – about the costs of Holcomb in the future. A – Stuart – there are many costs we don’t know in the future, and that affects all utilities, munis, co-ops, IOUs. Should any co-op deregulate they will continue to set rates with same of cost of service principles that KCC uses. Q: How many members in your organization have asked for this law? A: Unanimous demand for law when first adopted in 1992. Still uniform support for deregulation. Aquila acquisition makes the difference, some formerly unreg co-ops are now reg’d and they don’t want to be. Q: Still a question hanging – that purchase of Aquila was not the smartest thing and co-ops members are still paying for it. A: Their prices haven’t changed.

Rep. ??? for Stuart – Q: There are some co-ops who are deregulated, how is it working for them? A: Well, none of them want to go back under KCC, but members have the right to go back to KCC if they want.

Rep. ?? for Springe – Q: Your complaints – were these customer service probs, or rate probs? A: Service and bill shut off – like what you heard yesterday. Always the lingering “our rates are too high” complaint.

Rep. ?? for Tom T – Q: HB 2017 they want to put timeline on KCC – you don’t think they want timeline – MH cannot follow question re testimony. A: We did not testify on time limit issue. Sierra would probably support time limits. The issue is more complicated than you are presenting it. There’s a lot of pressure on KCC staff for turnaround and they don’t have the people they need. Timelines are important for transmission lines or anything. Q: Your assumption is that it is a coal issue – are you being fair to plants that aren’t involved in coal issue? A: If you deal with fuel issue generally, natural gas fluctuates. Coal prices going up. Renewables, once infrastructure established, fuel source doesn’t go up. Q: My concern is being fair to co-ops. A: Customer co-ops and other co-ops being used interchangeably, and they are different animals. Sunflower is not customer owned, they are member owned, so people paying rates – the customers – don’t have direct say. Q: But member co-ops not allowed to have generation, so it’s different situation. A: I don’t understand the whole system.

Rep. Sloan for Stuart – Q: You don’t have customer-owned co-ops. A: That is worded unfortunately in bill – they are member-owned. Member and customer are one and the same person, though. Q: Do you have copy of bill in front of you? I pulled statute in question, and I am wondering if easier way of drafting this concept is to change number of customers to account for extra Aquila customers. This should cover G&T as well as distribution. A: I’ll grant you that paragraph got pretty wordy but there is reason… (MH misses legal explanation). That’s why the detailed explanation of – does that make sense? Q: Not really.

(MH skips the discussion here) Issue here is distinction between member-owned, and customer-owned, issue that Sierra Club raised. Getting member board votes to appeal a rate problem and go back to KCC regs is different than getting popular customer votes.

Upshot from Rep. Sloan – “I’d really like to see some clarifying language on this.”

Rep. Talia for Stuart, asking for Rep. Moxley – Q: Does Sunflower have any competition? A: Sunflower is wholesale power supplier to member co-ops who have all power requirements contract. Their power comes from whatever resource meets their mission, so they get it off market. Rep. Holmes – but you have one REC without exclusive contract. Stuart – yes. Midwest. Q: Is Sunflower regulated now? A: Yes.

Rep Talia for himself, and for Stuart – Q: Why do you want deregulation for co-ops under this bill? A: Time and money. You can make decisions more quickly at board level about rates and costs and not have expense of KCC, doing the same thing twice. (MH skips rest)

Rep. Holmes for Tom T – back to member-owned and customer-owned. Upshot is that bill language is confusing re the distinction. Holmes is curious as to whether Sierra has position on munis, since they have position on co-ops. Tom says he’d be glad to find out.

Rep. Holmes for Springe – MH misses question. A: Regulation protects consumers better than anything else, even though regulations are far from perfect. If you exempt these co-ops, their customers get hit with some costs after the fact, when they can’t do anything about it. Q: What protection do munis have today? A: Munis have broader process for changing leadership than co-ops do. Q: How? A: Public elections, voting – that all changes muni leadership. Everyone can participate. More subtle difference – member co-ops don’t have open process, you have to get nominated and go through hoops. Board changes out very slowly over time, takes ten years to change a board out. Muni elections are more participatory. Q: Have you ever attended a meeting? They take nominations from the floor. You are saying that is not the process but you have never attended an annual co-op meeting. A: I said the muni process is more fluid. Q: There is no way muni customer can be brought before KCC. (MH skips rest) Regarding voting rights of former Aquila customers, do some of them not have enough rights? A: When they were acquired… (explains)

Rep. Moxley for Stuart – Q: On last paragraph of Springe’s testimony, do you object to adding this consumer protection? A: No.

Hearing closed on HB 2035.

Calendar revisions coming bigtime on subcommittees.

HB 2064 hearing will be Friday in subcommittee.

— Maril Hazlett, www.climateandenergy.org