Bill to ‘streamline’ utility rates is an assault on Kentucky consumers

With House Bill 341, Rep. Jim Gooch, R-Providence, has launched another assault on Kentucky consumers.

In the guise of “streamlining” the process by which regulated utilities in the state are allowed to adjust their rates, this bill would enable utilities to raise rates essentially at will, with less oversight by the Kentucky Public Service Commission (PSC), through a less transparent process and with far less opportunity for ratepayers to have their voices heard.

If HB 341 becomes law:

▪ Utilities could file for the streamlined process at any time within five years of their most recent full rate case and could continue doing so ad infinitum every 12 months.

▪ Anyone wishing to become a formal participant (an intervenor) in the PSC process would have to do so within 15 days of the utility filing the application; they now have 30 days. This would apply to the Kentucky Office of Attorney General, which represents ratepayers as whole before the PSC, as well as groups representing industrial, commercial, and low-income residential customers and others.

▪ Intervenors could submit no more than 50 questions to the utility. Under the current rate review process, requests for information often include hundreds of questions that explore in great detail the utility’s finances and its reasons for asking customers to pay more. Fifty questions would barely scratch the surface of most rate cases filed by major utilities.

▪ Intervenors may file only one set of comments. Under the current process, intervenors are allowed several rounds of questions to get the information they need to present their positions to the PSC.

▪ A public hearing would be held only if requested by the utility, denying intervenors another opportunity to question the utility and impeding both transparency and public access. The PSC, which typically holds hearings in most rate cases, would be barred from doing so unless the utility requests one. PSC decisions would be made without the public having an opportunity to view or participate in the process; at present, every hearing includes time for public comment.

▪ The PSC would have only four months to complete its review of the proposed rates. The process now typically takes about six months, with a limit of ten months. Shortening the review period will only put more strain on the short-handed regulatory agency’s ability to conduct comprehensive reviews of complicated cases that affect millions of Kentucky residents.

▪ The bill constrains the PSC’s ability to reduce a utility’s profits if changes in economic conditions warrant doing so.

▪ The bill greatly expands the types of expenses that utilities could seek to recover through rates without going through a full PSC review. Nearly any expense a utility incurs, outside of wages and benefits, could plausibly fit into the list set forth in the bill.

HB 341 includes a laughable requirement that the PSC hold public comment meetings — one for every 250,000 customers a utility serves. This would apply to precisely two utilities: LG&E and Kentucky Utilities. In the time I worked there, the PSC conducted far more public comment meetings than would be required under Gooch’s bill, but the threshold he sets could well be used to argue for reducing the public’s ability to participate in rate proceedings.

In sum, Gooch would allow utilities to swamp the PSC with requests to raise rates while limiting ratepayer participation, move proceedings behind closed doors, and virtually guarantee that the standard of review will be lower and rates will increase faster than they would under the current regulatory framework.

At a time when utility costs are already being driven higher by factors beyond the PSC’s control, HB 341 is the last thing Kentucky consumers need.

Andrew Melnykovych served as the Kentucky Public Service Commission’s spokesperson and public information officer for 18 years. He retired in 2020.

This story was originally published February 8, 2022 at 9:39 AM.