SESSION OF 2023
SUPPLEMENTAL NOTE ON HOUSE BILL NO. 2225
As Amended by House Committee on Energy,
Utilities and Telecommunications
Brief*
HB 2225, as amended, would amend law authorizing a
Kansas Corporation Commission (KCC)-regulated utility to
recover costs associated with the transmission of electric
power through a transmission delivery charge (TDC) and
require public utilities to evaluate the regional rate
competitiveness and impact to economic development in rate
proceedings.
[Note: The bill would only apply to electrical utility
companies that are under KCC jurisdiction.]
Applications for Rate Changes
The bill would amend law relating to applications for rate
changes to include a new section that would require any
general rate proceeding of electric public utilities serving
more than 20,000 customers to evaluate and include
assessments of the following for any application for a rate
change:
●The regional rate competitiveness of the electric
public utility’s current and proposed rates; and
●The impact of the electric public utility’s current and
proposed rates upon economic development within
the state.
____________________
*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
http://www.kslegislature.org Transmission Delivery Charges
The bill would allow a for-profit, investor-owned electric
utility serving more than 20,000 customers in the state that
elects to recover transmission-related costs through a TDC to
include as a component of the TDC the following:
●All transmission-related costs associated with
transmission facilities that are constructed as a
result of a notification or directive to construct from
a regional transmission organization (RTO) or
independent system operator (ISO) that is
regulated by the Federal Energy Regulatory
Commission (FERC) or its successor agency; and
●All fees and costs imposed on the electric utility in
connection with the operation of wholesale power
markets by an RTO, ISO, or other entity that is
regulated by FERC, other federal agency, or any
successor federal agency.
[Note: Kansas is a member of the Southwest Power
Pool (SPP), which is an RTO.]
The bill would also allow a for-profit, investor-owned
electric utility serving more than 20,000 customers in the
state to recover through a TDC the transmission-related costs
associated with transmission facilities constructed as a result
of such utility’s internal or local planning processes absent a
notification to construct or similar directive from an RTO or
ISO that is regulated by FERC or any successor agency
subject to such utility’s compliance with the section.
Cost Recovery
The bill would require a utility, in order to recover costs
as a component of a TDC and to facilitate KCC and KCC-
authorized intervenor review, to make a compliance filing with
the KCC prior to the time period provided for the KCC to
2- 2225 adjust the return on equity relating to such costs. The annual
compliance filing would be required to include the following:
●For non-blanket work order transmission projects
over $15 million or other amount deemed
necessary by the KCC staff in consultation with the
filing utility, an itemized projection of transmission
spending for the succeeding and second
succeeding calendar years;
●For each transmission project:
○A project identifier or name;
○Anticipated in-service date;
○The projected cost;
○Specified location within the utility’s system;
○Whether the project is classified as a new
build, rebuild, upgrade, or any other
appropriate classification;
○Narrative describing the reason for the project
and anticipated reliability benefits;
○Description of the original vintage of the
replaced facilities if the project is classified as
a rebuild or upgrade; and
○Load additions or economic development
accommodated by the project, if any; and
●Proposed date and time, no later than 90 days
after the utility filed the compliance filing, for
representatives of the public utility to conduct a
technical conference for discussing details of the
compliance filing with KCC staff, Citizen’s Utility
Ratepayer Board (CURB), and other KCC-
authorized intervenors; and
●Proposed date and time, no later than 120 days
after the utility filed the compliance filing, for KCC
3- 2225 to hold a public workshop in which representatives
of the public utility must present the details
associated with the transmission projects that are
anticipated in the succeeding calendar year, which
allows for questions and comments from the KCC,
KCC staff, and other KCC-authorized intervenors.
Return on Equity
The bill would require, beginning January 1, 2024, and
before April 1, 2024, that for any utility electing to recover the
costs described regarding a TDC, the KCC to adjust the
return on equity used to determine the revenue requirement
of such costs from FERC’s jurisdictional return on equity to
the KCC’s authorized return on equity last used to set the
utility’s base rates in effect at the time of filing the TDC
update.
If a return on equity was not explicitly established during
the utility’s last general rate case, the KCC would be required
to determine an appropriate return on equity from the record
of the last general rate case to establish the revenue
requirement for such costs.
The bill would state the KCC’s authorized return on
equity would not impact any project that was constructed as a
result of a notification to construct or similar directive from a
RTO or ISO that is regulated by FERC or any successor
agency.
In any transmission delivery charge update filing, a utility
electing to recover the costs through a TDC would be
required to utilize the KCC’s authorized return on equity that
was used to set the utility’s base rates in effect at the time of
the update filing or that was stipulated and approved by the
KCC for use in the transmission delivery charge if a return on
equity was not explicitly set during the last general rate case,
to determine the utility’s transmission delivery charge update.
4- 2225 Background
The bill was introduced by the House Committee on
Energy, Utilities and Telecommunications at the request of a
representative of the KCC.
House Committee on Energy, Utilities and
Telecommunications
Proponent Testimony
In the House Committee hearing on February 14, 2023,
representatives of Americans for Prosperity-Kansas, Kansas
Chamber, KCC, and Kansans for Lower Electric Rates
testified as proponents, stating the bill would allow the KCC
more control and oversight of development in Kansas, which
would help protect ratepayers and improve regional rate
competitiveness.
Written-only proponent testimony was provided by a
representative of the Kansas Agribusiness Retailers
Association, Kansas Grain and Feed Association, and Renew
Kansas Biofuels Association.
Neutral Testimony
Written-only neutral testimony was provided by a
representative of the Citizens’ Utility Ratepayer Board
(CURB).
Opponent Testimony
Opponent testimony was provided by a representative
of Evergy, stating the bill is regressive regulatory policy in its
current form. Repealing the TDC would prevent Evergy from
immediately passing on any savings or decreases from the
charge until the next rate case and would cause an increase
in rate cases that would negatively impact customers.
5- 2225 No other testimony was provided.
The House Committee recommended the bill be passed
on February 21, 2023, but the bill was withdrawn from the
House Calendar and referred to the House Committee on
Appropriations on February 22, 2023. The bill was then
withdrawn from the House Committee on Appropriations and
rereferred to the House Committee on Energy, Utilities and
Telecommunications on March 7, 2023. On March 9, 2023,
the House Committee amended the bill to:
●Require an electric public utility, in any general rate
proceeding of an electric public utility serving more
than 20,000 customers, to evaluate and include an
assessment in its application for a rate change: the
regional rate competitiveness of the current and
proposed rates, and the impact of the utility’s
current and proposed rates upon economic
development within the state;
●Require for-profit, investor-owned electric utility
serving more than 20,000 customers in the state
that elects to recover the utility’s transmission-
related costs through a TDC to include all fees and
costs imposed on the electric utility in connection
the operation of wholesale power markets by a
RTO, ISO, or other entity that is regulated by
FERC, other federal agency, or any successor
federal agency;
●Clarify language regarding notifications, the
population served by a for-profit, investor-owned
electric utility, and the utility’s compliance with new
requirements that were added by other
amendments;
●Require certain information to be included in
compliance filings with the KCC;
6- 2225 ●Require the utilities to hold technical conferences
and public workshops; and
●Require the KCC to adjust the return on equity for
any utility electing to recover the costs through a
TDC.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, CURB indicates that
enactment of the bill would result in $40,000 of additional
expenditures from the agency fee fund in FY 2023 and all
subsequent fiscal years. The expenditures would be made to
retain expert consultants to evaluate the recoverability of
transmission-related costs and analyze the impact of such
costs on consumers’ utility rates. This estimate assumes that
the additional consulting fees would total $60,000 per rate
case and that the agency would intervene in one rate case
every 18 months, on average.
According to the KCC, enactment of the bill would not
have a fiscal effect on agency operations.
Any fiscal effect associated with enactment of the bill is
not reflected in The FY 2024 Governor’s Budget Report.
Transmission delivery charge; Kansas Corporation Commission; investor-owned
electric utility; Federal Energy Regulatory Commission; regional transmission
organization; Southwest Power Pool; cost of recovery of transmission-related costs;
transmission facilities; Citizens’ Utility Ratepayer Board
7- 2225