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Ky. utility bill cuts public participation in ratemaking

Public participation in setting utility rates in Kentucky would be sharply curtailed under a new bill designed to accelerate the ratemaking process. 

House Bill 341, introduced last week, would allow utilities to “streamline” rate cases that go before state regulators at the Public Services Commission. These cases determine the prices that Kentuckians pay for electricity, gas, water and other services. 

Bill opponents say the measure would hamstring the Public Service Commission’s ability to question rate increases, limit the transparency and accountability of utilities and result in higher utility costs for Kentuckians. 

In its totality, the measure hampers the ability of ordinary Kentuckians to participate in rate cases, said Lane Boldman with the Kentucky Conservation Committee, a legislative nonprofit.

“We want to make sure that people understand the significance of this,” she said. “It really limits the rights of ratepayers to have a say in a rate hearing.”

Republican Rep. Jim Gooch of Providence sponsored the legislation, but did not return repeated requests for comment. Gooch is the chair of the House Natural Resources and Energy Commission. He denies the existence of man-made climate change.

The Public Service Commissions regulates utilities both big and small to ensure rates are reasonable for residents and profitable for utilities. Many of the state’s smaller utilities with revenues of $5 million or less already have access to a streamlined ratemaking process. Likewise, the state’s electric cooperatives have a streamlined process of their own.  

The proposed changes of Gooch’s bill would largely impact the state’s large investor-owned utilities. 

Limiting Public Participation

Here’s how a rate case works in broad strokes: a utility files a case to increase rates with the PSC. Intervenors ask the PSC if they can participate. These intervenors could include anyone that might have a stake in the rates – from large industrial or commercial customers, to the attorney general, to nonprofits that advocate for the environment and low income ratepayers. 

Then, if they’re allowed in the process, intervenors can ask utilities to produce further evidence and offer up expert witness testimony in an effort to help the PSC’s three commissioners make an informed decision about setting rates. 

Under HB 341, so-called evidentiary hearings could only be held when the utility asks for them. 

Intervenors would be limited to 50 questions and those can only be “clarifying” questions about the application. It would not allow intervenors to ask for information outside of what’s contained in the application.

At the same time, there’s no provision allowing PSC staff to request data from the utilities, said Tom FitzGerald, environmental attorney with the Kentucky Resources Council.

Intervenors could only file one set of written comments, and no expert testimony or other evidence could be supplied, he said. 

Additionally, utilities would not have to post public notices in newspapers for a streamlined case. Only one public meeting would be required for every 250,000 residents. 

The end result of these rules would be that the Public Service Commission could only base its decisions on evidence supplied by utilities, FitzGerald said.

Rate riders

A second section of HB 341 would override the typical rate-making process through a “rate rider,” allowing them to skip intervenors and require the Public Service Commission to approve utility-proposed rates without involving the public. 

“The approval of any rider is currently at the Commission’s discretion, and is subject to evidence and testimony from intervenors, yet HB 341 mandates that the Commission accept any proposed rider, whether or not such a rider is in the public interest,” FitzGerald said.

The rider would allow utilities to recover finances for essentially all of the costs that go into their rates including operation and maintenance costs, taxes, capital costs and a reasonable return on investment. 

Ryan Van Velzer is WFPL's Energy and Environment Reporter. Email Ryan at rvanvelzer@lpm.org.

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