Wichita-area residents testify against Kansas Gas Service rate hike request

Margaret Miller, who has been battling on behalf of Kansas utility consumers since the 1980s, used a walker to get to the podium Thursday evening to protest a Kansas Gas Service plan to raise rates for home customers while cutting rates for medium and large businesses.

“Elderly people on fixed incomes should not be faced with these ever-increasing costs,” said Miller, 93. “Poor people should not be made to beg for charity to get their heating bills paid, or even have to go without.

“Many businesses have developed cost-cutting measures during the recession, but utilities seem to think that small customers should accept their requests without question. Well, we’re not doing so tonight.”

Miller was one of about three dozen Wichita-area residents who came to a Kansas Corporation Commission public hearing to protest or find out more about the gas company’s request for a $32.7 million rate increase, almost all of which will be paid by residential customers.

The commission is scheduled to decide whether to grant the company’s request by January.

If approved, the rate hike would add about $5.68 a month — about 9.1 percent overall — to the average residential customer bill.

Middle-sized business would get an average 3.9 percent reduction, while large commercial customers would see their average rates cut 8.2 percent.

The rate request only bears on the income that Kansas Gas gets to build and operate the gas system. The actual cost of natural gas varies according to the market and is passed straight through to consumers.

Key issues in the rate case include a proposal by the company for “revenue normalization,” in essence a guarantee that would lead to higher rates if Kansas Gas doesn’t make as much money as the commission decides to allow.

Another major issue is the company’s request for a 10.75 percent rate of return for its stockholders. It says that is needed to attract investment in the company.

State consumer advocates from the Citizens’ Utility Ratepayer Board argue that a return in the 8 percent range would be more reasonable, especially if the commission reduces the utility’s risk by granting it a revenue guarantee.

Brad Dixon, the president of Kansas Gas, defended the company’s request, saying the utility has fixed costs to provide gas and “these costs do not change regardless of the amount of gas we sell.”

The company wants to put the bulk of the rate increase on the residential customers after a study showed that higher-volume commercial customers were paying more of the cost to run the system than they generate.

The new request “more closely matches the cost required to serve each class of customer,” Dixon said.

In addition, the company is seeking to get a larger share of its income from the set monthly fee for gas service, rather than charges that are based on the amount of gas used.

Dixon acknowledged that part of the reason for that is that residential customers have taken measures to conserve gas, which reduced the company’s sales.

Residents who testified at the hearing weren’t too happy about that.

“It’s corporate welfare,” Diana Alexander of Wichita told the commissioners. “I think the cost of gas should be based on usage and not some arbitrary system.

“If the normalization goes through they’ll be penalizing all the customers for conserving a finite resource,” Alexander added. “I feel like they’re trying to provide relief to the commercial customers, but they’re not going about it the right way.”

Margaret Miller’s husband, Paul, 94, said he lived without utilities the first 18 years of his life and appreciates having them now. But he challenged the gas company’s assertion that it costs about the same to serve residential and commercial customers regardless of volume. He said the large users create a need for bigger mains and more pumping facilities.

“If you have a few large customers come in on a line and you have to expand that line … if you decide to spread the cost over all the customers instead of just the ones who are benefiting from it, you really penalize the small users,” he said.

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