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Suit against Kansas Corporation Commission alleges open meetings violation in vote on water rate increase

  • The Wichita Eagle
  • Published Wednesday, June 19, 2013, at 10:44 p.m.
  • Updated Wednesday, June 19, 2013, at 10:56 p.m.

A Topeka prosecutor filed a lawsuit Wednesday alleging members of the Kansas Corporation Commission violated the state’s open meetings law on a vote that more than doubled the water rate for a small community near Salina.

Shawnee County District Attorney Chad Taylor filed the suit that sought to void KCC’s order granting a rate increase of more than 120 percent for a private water utility company that serves Howison Heights.

“The primary purposes of this action are to ensure that both the statutory provisions of the (Kansas Open Meetings Act) are adhered to and the purpose of the act, governmental transparency, is enforced,” Taylor said in a statement.

The KCC, the state’s primary regulator of utility rates and practices, said it did not violate the opening meetings act.

The lawsuit was spurred by a complaint from the Citizens’ Utility Ratepayer Board, a small state agency that advocates for consumers in utility cases. The group said that the three-member commission violated the open meetings law while approving the rate increase on June 6.

CURB said the commission may have been routinely violating the law for years through a process called “pink sheeting,” which allows commissioners to sign off on decisions without having a public meeting.

In a letter to Kansas Attorney General Derek Schmidt, Taylor and CURB, the commission said it “is meticulous in its efforts to comply with” the law.

The commission acknowledged a “potential technical violation” of the law by KCC Chairman Mark Sievers and Commissioner Shari Feist Albrecht during the process of delivering the order and minutes.

In addition to the commission, Sievers, Feist Albrecht and Commissioner Thomas Wright were named individually in the lawsuit.

At a public meeting in Topeka on Wednesday, commissioners received a very brief report from their chief litigation counsel on efforts to re-evaluate and, if necessary, change some of the ways the agency does business.

The lawyer, Bob Fox, said commission staff members are working toward hiring an outside consultant to examine the KCC’s processes and make recommendations.

Asked how the effort was going, he said, “I think we’re good.”

David Springe, chief consumer counsel for CURB, said that Taylor’s filing of the lawsuit vindicates what his group thought was a violation of the open meetings act.

“Ultimately, it’s not my intent to beat up the KCC,” he said. “We have a fundamental disagreement with the KCC over what the open meetings act requires. We need some clarity.”

Springe is hoping the lawsuit will accomplish that.

“We need to go through this process, get on the same page about what procedures are required,” he added. “Getting it sorted out is good for all of us.”

The case revolves around KCC’s handling of a rate increase request filed by Howison Heights Rural Water District Inc., which serves 62 customers in the development. Developer Tim Howison, owner of the utility, requested a rate increase of $48,702 and was granted one for $47,231.

According to a petition filed by Taylor, Howison failed to deposit all payments for water sales into the utility’s account, and a large percentage of the utility’s expenses were not supported. The company was in a “dire financial situation,” the petition said.

During a public comment period on the rate increase request, a third of the customers criticized Howison’s quality of service, the petition said.

As for the allegation of violating the open meetings law, the petition said that Feist Albrecht and Sievers together reviewed the proposed order for a rate increase and approved the action. The proposed order was then “routed to Commissioner Wright, who without knowledge of the collaboration between” Feist Albrecht and Sievers, reviewed and approved the order, the petition said.

In an e-mail from KCC attached to CURB’s complaint, commission lawyers defended approving orders in private as an “emergency” process to meet state deadlines.

The pink sheeting is used to approve orders when it’s inconvenient to bring the three commissioners together for a meeting, the e-mail said.

The practice draws its name from the color of slips of paper used to gather the signatures.

Given the controversial nature of the rate request, Springe said he was surprised the commission didn’t conduct the process more openly.

“This flew under the radar,” he said.

In addition to the allegation of violating the open meetings act, Springe said, “We have a troubled water utility out there. We all need to find some way to solve the problem, because we want to make sure the customers have clean, safe water at affordable rates and that you have a viable business.

“But you can’t keep throwing customer money at it.”

In addition to the short briefing by Fox on Wednesday, the commissioners received a substantially longer report on the tiny water company whose case is at the heart of the closed-meeting allegations.

Jeff McClanahan, KCC director of utilities, said the Howison Heights water company is in deep financial trouble and is facing an Oct. 1 trial on foreclosure proceedings by two banks.

Although the commission primarily regulates electric and gas utilities, a handful of small, privately owned water companies, including Howison, falls under commission jurisdiction.

Several possible scenarios were discussed at the meeting, including:

• The Howison wells and distribution system could be sold to a rural water district or the nearby city of Salina.

• Banks foreclosing on Tim Howison’s assets could be required to comply with terms of his company’s “certificate of convenience,” a state document that authorizes the operation of the water service and requires it to be continued.

• The commission could take over the water company and find an operator to run it.

Sievers said his main concern at this point is that “we don’t end up stranding 62 families and leaving them with no water.”

Reach Rick Plumlee at 316-268-6660 or rplumlee@wichitaeagle.com.

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