‘Utility’s dream, customer’s nightmare.’ House bill would ‘streamline’ rate increases
A key House Republican leader is sponsoring a bill that would make it easier for Kentucky utility companies and nonprofit electric cooperatives to raise their rates by reducing public scrutiny and outside intervention.
Consumer-protection groups who try to limit dramatic price hikes are sounding alarms among their members this week, calling House Bill 341 a one-sided gift to the utility industry.
“House Bill 341 would open the door for big utility companies to avoid accountability and scrutiny before the Public Service Commission and ratepayers when they seek unfair or unreasonable rate increases,” AARP Kentucky Associate State Director Eric Evans said in a prepared statement on Tuesday.
The bill was filed Jan. 21 by Rep. Jim Gooch, R-Providence, longtime chairman of the House Committee on Natural Resources and Energy.
Gooch did not respond this week to calls and email requesting comment on his bill.
The bill would “streamline” the process by which electric, natural gas and water utilities ask for a rate increase from state regulators at the Public Service Commission.
If utilities asked to use the “streamlined regulatory method,” changes would include:
▪ No longer requiring public notice of rate increase requests to be published in local newspapers, alerting communities;
▪ Reducing by more than half the window of time for outside parties to intervene in rate increase requests;
▪ Limiting the requests for information that outside parties and the PSC regulatory staff could make to utilities to determine if rate increases are necessary;
▪ Limiting outside parties to filing “comments” on the request, rather than allowing them to present expert testimony or other evidence to challenge the need for rate increases;
▪ Ending the customary evidence-based PSC hearings where all sides can present experts and data while under oath, unless the utilities request such a hearing;
▪ Requiring only one public hearing to discuss rate increase requests for every 250,000 utility customers;
▪ Requiring the PSC to approve rate increases as necessary so “that the utility shall earn the authorized return on equity.” Also, the PSC would be required to approve “riders,” or adjustments added between general rate cases, for a wide variety of reasons, including infrastructure improvements, pipeline replacement and safety modifications, enhancements in safety system and reliability, and economic development initiatives.
Although the PSC is not taking a formal position on the bill, the agency said Tuesday that it would dramatically change the PSC’s role in regulating utilities.
“The PSC expressed to the sponsor a concern that the legislation could increase the PSC’s workload and lead to higher utility rates,” said Karen Wilson, the PSC’s executive advisor.
“If passed, this bill would likely represent the most significant change in how for-profit utilities are regulated in Kentucky since the creation of the PSC and, as such, the PSC anticipates providing relevant information and perspective to the remainder of the legislature on the bill’s impact on the agency and utility regulation,” Wilson said.
Tom FitzGerald, a longtime environmental attorney and lobbyist in Frankfort, said Gooch’s bill would undermine the important role played by the PSC and outside parties in scrutinizing claims made by utilities when they say they must charge their customers more money.
Among those outside parties are the attorney general’s office and assorted consumer protection nonprofits.
Instead of a transparent, equally weighted system where all parties get to ask questions and introduce evidence, the bill would prioritize approving the utilities’ requests, FitzGerald said.
“In sum, HB 341 is a PSC-regulated utility’s dream and a utility rate-paying customer’s nightmare,” FitzGerald said.
