The Kansas Corporation Commission’s staff has made the surprising recommendation that Kansas Gas Service receive only 10 percent of the net rate increase it wants. Now, the KCC should trust its staff experts and rule that the company’s preferred hike is far too rich.
Doing so would build public trust, and counter the public impression that KCC vetting of rate cases is a formality on the way to certain approval. It also would matter a lot to the company’s 632,000 ratepayers.
The company has asked for a net increase of about $32 million a year, or about $5.68 more a month for an average customer. In response, the KCC staff has recommended a $3.6 million hike translating into a $1-a-month bump for an average ratepayer.
The KCC staff’s recommendation would set a 9 percent shareholder return. Though that’s less than the 10.7 percent Kansas Gas Service is seeking, it still sounds generous in this uncertain economy.
The KCC staff also favored giving the company its desired “revenue normalization adjustment” – a kind of profit guarantee enabling it to raise rates if usage declines. That looks like Kansas Gas Service unreasonably wants to insulate itself from the normal risk of doing business. It also would punish energy conservation with higher rates.
Revenue normalization on such an across-the-board scale would be unprecedented for Kansas utility regulation, according to David Springe, consumer counsel of the watchdog Citizens’ Utility Ratepayer Board. “We don’t think they should get it. We’re a little stunned that staff said, ‘Yeah, go ahead,’” Springe told The Eagle editorial board.
CURB also proposes a lower shareholder return than KCC staff recommended, and finds fault with the company’s request to charge residential customers more while charging commercial and industrial users less.
The public hearings already have been held in the case. But Kansans can still be heard through Oct. 31. Comments should refer to Docket No. 12-KGSG-835-RTS and can be filed by e-mail to email@example.com; by mail to the KCC’s Office of Public Affairs and Consumer Protection, 1500 S.W. Arrowhead Road, Topeka, KS 66604-4027; or by phone at 800-662-0027.
Evidentiary hearings will begin Nov. 5, with a final KCC decision due by Jan. 14.
Gov. Sam Brownback’s recent appointment of Commissioner Shari Feist Albrecht returned the KCC to full strength after six months. Brownback also appointed Chairman Mark Sievers. The third KCC member is Thomas Wright, an appointee of Govs. Kathleen Sebelius and Mark Parkinson.
How the commission responds to the Kansas Gas Service rate case will be an important test of the KCC under Brownback, and determine whether ratepayers soon will be paying a little or a lot more.