Electric Utility Cost Recovery through Transmission Delivery Charges; HB 2225
HB 2225 amends 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 requires public utilities to evaluate the regional rate competitiveness
and impact to economic development in rate proceedings.
[Note: The bill only applies to electric utility companies that are under KCC jurisdiction.]
Applications for Rate Changes
The bill amends law relating to applications for rate changes to include a new section
that requires 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.
Transmission Delivery Charges
The bill allows 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 a 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 a RTO.]
The bill also allows 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.
Kansas Legislative Research Department 1 2023 Summary of Legislation Cost Recovery
The bill requires 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 adjust the return on equity relating to such costs.
The annual compliance filing is 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;
●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 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 requires, beginning January 1, 2024, and before April 1, 2024, for any utility
electing to recover the costs described regarding a TDC, the KCC to adjust the return on equity
(ROE) used to determine the revenue requirement of such costs from FERC’s jurisdictional
Kansas Legislative Research Department 2 2023 Summary of Legislation ROE to the KCC’s authorized ROE last used to set the utility’s base rates in effect at the time of
filing the TDC update.
If a ROE was not explicitly established during the utility’s last general rate case, the KCC
is required to determine an appropriate ROE from the record of the last general rate case to
establish the revenue requirement for such costs.
The bill states the KCC’s authorized ROE does 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 TDC update filing, a utility electing to recover the costs through a TDC is required
to utilize the KCC’s authorized ROE 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 TDC if a
ROE was not explicitly set during the last general rate case, to determine the utility’s TDC
update.
Kansas Legislative Research Department 3 2023 Summary of Legislation