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A State Legislator Looks at Retail Wheeling

As FERC moves forward, most state legislators have remained content to sit back and wait for others to act. Part of this reticence stems from politics—the difficulty of changing course, invading someone else's turf, or tackling a new subject outside one's area of expertise. Legislators view problems differently than do regulators.

Fortnightly Magazine - July 1 1996

from competition, but enjoy protection for their investments as members or taxpayers, the bill grants opt-out rights to co-ops and municipal electric utilities to avoid inclusion in a customer block, by a vote of their members or customers. A vote of the co-op members or municipal residents can keep them out of the competitive provisions of this bill. But if members or voters choose to participate, then the provisions of H.B. 2623 protect their previous investments in generation, transmission, and distribution equipment.

5. Term Limits. Recognizing that defined service territories restrict competition, H.B. 2623 allows the KCC to award customer blocks for periods of 3-5 years and provide for the supplier's recovery of new capital investments.

Nevertheless, suppliers will want a reasonable opportunity to recover investments in capital and new technologies over a longer term, regardless of time limits placed on service rights within a customer block, or which provider supplies electricity to the block. Thus, infrastructure investments made in a block would become part of the capital-investment recovery process of the next bidding process. All potential bidders on that customer block would include in their bids the KCC's approved investment recovery rate.

6. Social Obligations. Legislators must also consider other issues related to the "traditional" manner in which the local energy company has interacted with the communities it serves. The KCC presently has enforced important utility company social responsibilities endorsed by the legislature. These responsibilities include imposing a cold weather rule preventing the disconnection of utility service during the winter (em

even for those unable to pay their utility bills (em and encouraging utilities to support worthy community organizations through charitable contributions.

Protecting the well-being of our communities and less affluent citizens requires a continued regulatory role by the KCC. H.B. 2623 maintains this oversight function.

The Outlook in Kansas

The Kansas Legislature, not surprisingly, has opted to study these issues further before making any decisions. H.B. 2623 is not perfect, but it raises and addresses the most significant issues of concern to electric customers and providers. It offers a likely starting point for discussions on electric utility deregulation.

Perhaps this bill will stimulate discussion not only in Kansas, but nationally as well, on how state legislatures can assume an active role in the debate.