Consumer agency files complaint alleging Kansas utility commission acted illegally

06/19/2013 1:20 PM

08/08/2014 10:17 AM

A state consumer agency filed complaints with prosecutors on Tuesday alleging that the Kansas Corporation Commission violated open-meeting law by approving a water-rate increase without a public vote.

In its complaint, the Citizens’ Utility Ratepayer Board also claims the commission may have been routinely violating the law for four years through a process called “pink sheeting,” which allows commissioners to sign off on decisions without having a public meeting.

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

In e-mails attached to CURB’s complaint, KCC lawyers defended approving orders in private as an “emergency” process to meet state deadlines. In a written statement Tuesday, an agency spokesman said the KCC will “fully cooperate to determine the validity of CURB’s open meeting claim.”

The e-mails said the commission routinely uses pink sheeting to approve orders when it’s inconvenient to bring the three commissioners together for a meeting.

A KCC attorney circulates a proposed order individually to each of the commissioners and obtains a signature from each indicating approval.

The collection of signatures takes the place of a vote in an open meeting and the order is issued.

The KCC is the state’s primary regulator of utility rates and practices. CURB, a much smaller state agency, represents residential and small-business utility customers.

In its complaint, CURB alleges that pink sheeting violates the Kansas Open Meetings Act, which generally requires public business to be conducted at public meetings.

CURB sent separate letters to Attorney General Derek Schmidt and Shawnee County District Attorney Chad Taylor asking them to investigate.

The case revolves around the commission’s handling of a rate-increase request filed by Howison Heights Rural Water District Inc., a privately-owned water provider serving 62 customers in a single development near Salina.

According to commission records, the water utility was far behind on its taxes and facing a bank foreclosure of its equipment.

The owner and developer, Tim Howison, had kept poor records and comingled water company funds with those of his other businesses, commission staff found. A third of the customers have filed complaints about rates and water quality issues.

On June 6, the commission issued an interim order granting the water company a total rate increase of $47,231 – a 127 percent increase for customers.

The order set a minimum monthly charge for water at $40, plus additional charges based on use.

The increase includes a $23,500 salary for Howison, who had not previously been drawing a salary for running the water company.

The order said it will become permanent after a 90-day comment period, although it could be reopened if there’s “substantial comment” from ratepayers.

“The KCC is trying to solve this by throwing money at it,” said CURB Chief Consumer Counsel David Springe. “Unfortunately, they’re throwing our clients’ (the customers) money at it.”

Springe said the open-meetings complaint came into play when the commission issued its order without a public meeting or vote.

He said CURB plans to appeal the case to court, but first needs to determine whether the order is even valid.

“I don’t want this to be an attack (on the KCC), but we need to get this sorted out,” he said.

When CURB attorney Niki Christopher inquired about the process via e-mail, KCC Advisory Counsel Jay Van Blaricum replied that the order “was approved through an emergency process designed to get commission approval of orders with a deadline that does not coincide with an open meeting date.

“Because this order was due on June 10 and all three commissioners will be gone on that day, the order had to be issued by the end of this week, so it qualified for the emergency approval procedure.”

Christopher then asked Van Blaricum to cite a law or commission regulation authorizing the emergency process.

Van Blaricum replied: “This process, known as ‘pink sheeting,’ has been in place at the commission for years. I am not aware of a regulation or statute that authorizes it. … I personally met with each commissioner individually to determine their position on the case, but the interim order was not discussed in an open meeting because there was no need for deliberation.”

The records show the KCC staff has been dealing with the issues at Howison since November 2011.

In a follow-up e-mail, KCC General Counsel Dana Bradbury told Christopher, “Orders have historically and routinely been pink sheeted by the commission for years … If you believe there has been a violation of statute, commission rules or due process, please feel free to file a petition for reconsideration of the issue.”

In CURB’s complaints to prosecutors, Christopher charges that pink sheeting is a violation of the Open Meetings Act – specifically revisions that took effect July 1, 2009 to ban so-called “serial meetings.”

Serial meetings allowed government officials to circumvent the open-meetings law by holding multiple meetings – each with less than a quorum of the body – to discuss and decide public issues in private.

CURB is asking the prosecutors to immediately address the Howison case because of the time pressure involved – and then go back over the commission’s decisions of the past four years to determine the full extent of pink sheeting.

“If, as Ms. Bradbury confirmed, the commission has ‘historically and routinely’ used the described ‘pink sheeting’ procedure to make other binding decisions that are required to be made in an open meeting, multiple violations of the act may have occurred in addition to the incident on June 6,” Christopher wrote.

The KCC’s Tuesday statement said the agency “takes very seriously the accusation” that CURB is making.

“The Commission takes compliance with KOMA (the Kansas Open Meetings Act) seriously and follows acceptable longstanding voting procedures established to handle the large volume of orders the commission processes under deadlines,” the statement said. “On average, the commission issues approximately 2,500 orders per year.”

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