Harris News: “Bill would permit more rural utility deregulation”
January 30, 2009
From Harris News:
By Chris Green
TOPEKA — More rural electric cooperatives could set rates without the oversight of state utility regulators under a bill discussed Wednesday by a legislative panel.
A proposal before the House Energy and Utilities Committee would allow members of electric cooperatives with 15,000 or more retail customers to vote to exempt themselves from Kansas Corporation Commission jurisdiction.
Two large cooperatives that provide generation and transmission services to their members — including Hays-based Sunflower Electric Power Corp. — could also seek a regulatory exemption for the first time.
The committee took no action on the proposal but it has been assigned to a sub-committee by Chairman Carl Holmes, R-Liberal, for further study.
Rural electric cooperatives serving fewer than 15,000 retail customers have already had the option to deregulate since 1992. So far, 25 electric distributors have taken that path, a lobbyist for electric cooperatives said.
Stuart Lowry, executive vice president and general counsel for Kansas Electric Cooperatives, Inc., said larger coops seek the option now to save “time and money.”
He said allowing cooperative boards to set rates “doesn’t force rate case proceedings before the KCC,” which can be expensive and lengthy.
Plus, unlike investor-owned utilities, which seek to earn profits for shareholders, rural electric cooperatives are nonprofits owned by the members they serve.
More deregulation drew opposition, though, from an advocate for consumers, who said the move would remove a layer of protection afforded to ratepayers of member-owned cooperatives.
“I think it’s naive to think that just because something is member owned, that the process in place works for consumers,” said David Springe, consumer counsel for the Citizens’ Utility Ratepayer Board.
An environmental group also took issue with the change as well, saying it would give too much power to cooperative boards.
But Lowry, whose group consists of 30 electric cooperatives serving 400,000 customers across the state, said that the deregulation option would still maintain an important “safety net” for consumers.
Under the legislation, even if a cooperative’s members vote in favor of deregulation, small groups of customers can still petition to have their rate decisions reviewed by the KCC.
For those served by a retail cooperative, 5 percent of members or 3 percent of a rate class may successfully ask state utility regulators to review their board’s ruling. It takes a 20 percent of cooperative members or 5 percent of retail customers to force a KCC review of decisions by generation and transmission cooperatives.
Lowry noted that a protest provision already applies to smaller retail cooperatives and that no case has been brought before the KCC under the law in 17 years.
A similar proposal to expand deregulation of rural electric cooperatives appeared last year in legislation that sought to clear the way for Sunflower’s proposal to build two new coal-fired power plants near Holcomb.
Tom Thompson, a lobbyist the Kansas Sierra Club, said he was concerned that deregulation would come at a time when there are unanswered questions about that proposed expansion’s construction costs and its potential effects on customer’s electricity rates.
He said the KCC might want to examine how much coal power will cost in the future and what the consequences might result should the federal government decide to regulate carbon dioxide emissions.
“The Sierra Club believes that KCC jurisdiction in this situation is important,” Thompson said.
Guest Blog: League of Women Voters- Great Bend
January 30, 2009
The League of Women Voters (LWV) has named global climate change as a priority issue for 2009. Therefore, LWV chapters around the country will be researching, discussing, and mobilizing their membership on this issue.
In this guest blog series, we asked the Kansas League of Women Voters to weigh in with their thoughts. This series of interviews spotlights perspectives from various LWV chapters around the state of Kansas.
The following interview is with Beverly Komarek, an active League member, and director of the Barton County Historical Museum and Village in Great Bend, KS.
Great Bend –”It’s the economy that is the huge issue right now,” says Beverly Komarek. “For the most part, people in the region don’t feel personally affected by climate change,” she observes.
Energy is also an issue people are talking about. Sunflower Electric Power Corporation’s proposal to build two new coal-fired power plants in addition to the one now operating at Holcomb in Finney County, is generally supported, based on the jobs it would bring to western Kansas, said Komarek.
Great Bend is located 40 miles south of Russell in the very center of Kansas where the Arkansas River turns to head southeast to Wichita. Nearby is Cheyenne Bottoms Wildlife Area where tens of thousands of shore birds and waterfowl stop off to feed and rest during migration on the North American central flyway.
Agriculture drives the economy of the community of about 15,000 people. “Dry-land crops do OK here most years,” Komarek said, “but there is also a significant amount of irrigated cropland in Barton County.”
Komarek is the director of the Barton County Historical Museum and Village in Great Bend. Other than local history, her passion is Kansas water management and policy.
For Komarek, water is the issue.
“Water chose me,” Komarek said. She has been involved in Kansas water issues since 1977 when she helped facilitate the first water study by the League of Women Voters of Kansas (LWVK). For a decade plus, she has also been a member of the Upper Arkansas Basin Advisory Committee, which provides input for the Kansas Water Office (KWO).
The Arkansas River is the major source of surface water for Western Kansas.
“Water is THE issue,” said Komarek.. “One of these years, Kansas is going to have to reinvent itself, because availability of water for present and increasing demands for all beneficial uses, as defined by state statute, will not be available in many areas,” she said.
Each segment of the economy in Western Kansas depends on continued access to water at or above the quantity currently used. The region sits on the Ogallala Aquifer which extends beneath parts of eight states. An arm of the aquifer reaches east into Central Kansas beyond Great Bend.
Water use permits are regulated by the state in most areas in Western Kansas. “Great Bend is unique in the region in that we have not yet had problems with the municipal water supply, unlike many other communities. Although people don’t talk about climate change, they know that weather affects water needs,” said Komarek. During drought years when water demands are greater, the problems of both quantity and quality have accelerated. “Garden City, in heavily irrigated Finney County, has to use reverse osmosis to purify its drinking water,” she said.
“Although water users want to regulate themselves, the reality is that some users abuse the system and, frankly, it is difficult to keep everyone in compliance,” said Komarek.
The problem across the multi-state region of states that draw water from the Ogalla Aquifer is that, in general, it is not recharging at the rate at which it is being used. The fact raises concerns in some corners about the tradeoffs related to water and energy production in Western Kansas.
“Questions about the long-term impact of the proposed power plants at the Holcomb site on the agricultural economy of western Kansas have yet to be addressed,” Komarek said.
“Sunflower Electric publications estimate that each of the proposed coal plants will use 8,000 acre-feet of water annually. In order to apply for permits to build the new power plants, Sunflower had to have secured rights to that amount of water,” said Komarek.
The State of Kansas has no more water rights to appropriate in the area, so Sunflower has purchased appropriations from existing permits. Since Finney County, where Holcomb is located, is one of the most heavily irrigated counties in the state, it’s reasonable to assume that those water rights were purchased from owners who are currently irrigators, Komarek said. Among questions to be addressed, she suggests, are: how the economy of the communities now dependent on irrigators will be affected, and how long the aquifer will provide adequate water to the power plants, the remaining irrigators and the communities.
“The Kansas Water Office, LWVK and numerous other organizations are becoming increasingly aware of the interconnection between energy, power production and water,” said Komarek. As an example she points to the following statements from LWVK Water Resources Management Position -2009.
“A continuous supply of water must be maintained within Kansas through conservation and the use of the best available technology. State and Local governments should develop and maintain water supplies with one goal being potable water for all citizens.” —-LWVK policy recommendations urge Kansas lawmakers to: “Coordinate Water Planning and the State Energy Plan which would include the full cost of water used in the production and transportation of energy.”
Interview conducted by LWV-Kansas members, Barbara Hayter and Jean Lee.
