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Kan. lawmakers advance resolution to make electricity rates more competitive

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Kan. lawmakers advance resolution to make electricity rates more competitive

The Kansas Industrial Consumers Group is calling on state lawmakers to support a resolution the coalition of large-volume energy users said will help provide rate relief.

Senate Concurrent Resolution No. 1612 encourages the Kansas Corporation Commission, or KCC, "to take all lawful action to promptly set rates for retail electric service in the state of Kansas at regionally competitive levels." The measure, sponsored by state Sen. Julia Lynn, cleared the Senate Commerce Committee on March 14 and now moves to the Senate.

While the proposal has the support of the industrial group, a representative for Kansas City Power & Light Co., or KCP&L, and Westar Energy Inc. said it is a solution in search of a problem.

Chuck Caisley, vice president of marketing and public affairs for KCP&L, who testified on behalf of KCP&L and Westar, said the companies agree on the need to address increases in electricity costs, but the resolution is not the solution. He told lawmakers that federal environmental mandates, and state energy mandates and policy objectives have helped contribute to higher costs.

Among other things, federal tax reform and the merger of KCP&L parent Great Plains Energy Inc. and Westar are already set to bring benefits to customers, he said. A five-year rate case moratorium, for example, called for in a merger settlement that includes the utilities, KCC staff and the Citizen's Utility Ratepayer Board, and the fact that KCP&L has not had a rate increase in three years means "an era of at least eight years of flat to declining rates, which is exactly what proponents of the resolution are asking for," Caisley said.

Jim Zakoura, president of the Kansas Industrial Consumers Group, told lawmakers at a March 12 hearing that electricity rates have climbed over the last decade, posing a problem for businesses to remain competitive. According to the U.S. Energy Information Administration, electric utility rates in Kansas averaged 10.58 per kWh in 2017, the highest in the West North Central region.

"Simply put, high electric rates make recruiting to Kansas hard," Zakoura said.

The resolution can help, as it acknowledges high electric costs are a problem for Kansas, Zakoura said.

KCC staff have taken a neutral stance on the resolution but did tell lawmakers that encouraging regulators to set a rate-making paradigm based on comparisons to other regional states "is most likely illegal." The resolution is also premature as there has not been a study of why Kansas rates differ from other states in the region, staff said. Such a study is part of a settlement in the KCP&L and Westar merger, staff said.