HOUSE BILL No. 2225
AN ACT concerning utilities; relating to electric utilities; including cost recovery of
transmission-related costs for transmission facilities constructed as a result of a
directive from the regional transmission organization; authorizing cost recovery for
transmission facilities constructed as a result of internal or local planning under
certain circumstances; requiring the commission to adjust the authorized return on
equity for such internal or local transmission projects recovered through a
transmission delivery charge; requiring public utilities to evaluate the regional rate
competitiveness and impact to economic development in rate proceedings; amending
K.S.A. 66-117 and 66-1237 and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 66-117 is hereby amended to read as follows:
66-117. (a) Unless the state corporation commission otherwise orders,
no common carrier or public utility over which the commission has
control shall make effective any changed rate, joint rate, toll, charge or
classification or schedule of charges, or any rule or regulation or
practice pertaining to the service or rates of such public utility or
common carrier except by filing the same with the commission at least
30 days prior to the proposed effective date. The commission, for good
cause, may allow such changed rate, joint rate, toll, charge or
classification or schedule of charges, or rule or regulation or practice
pertaining to the service or rates of any such public utility or common
carrier to become effective on less than 30 days' notice. If the
commission allows a change to become effective on less than 30 days'
notice, the effective date of the allowed change shall be the date
established in the commission order approving such change, or the date
of the order if no effective date is otherwise established. Any such
proposed change shall be shown by filing with the state corporation
commission a schedule showing the changes, and such changes shall be
plainly indicated by proper reference marks in amendments or
supplements to existing tariffs, schedules or classifications, or in new
issues thereof.
(b) Whenever any common carrier or public utility governed by
the provisions of this act files with the state corporation commission a
schedule showing the changes desired to be made and put in force by
such public utility or common carrier, the commission either upon
complaint or upon its own motion, may give notice and hold a hearing
upon such proposed changes. Pending such hearing, the commission
may suspend the operation of such schedule and defer the effective date
of such change in rate, joint rate, toll, charge or classification or
schedule of charges, or any rule or regulation or practice pertaining to
the service or rates of any such public utility or common carrier by
delivering to such public utility or common carrier a statement in
writing of its reasons for such suspension.
(c) The commission shall not delay the effective date of the
proposed change in rate, joint rate, toll, charge or classification or
schedule of charges, or in any rule or regulation or practice pertaining
to the service or rates of any such public utility or common carrier,
more than 240 days beyond the date the public utility or common
carrier filed its application requesting the proposed change. If the
commission does not suspend the proposed schedule within 30 days of
the date the same is filed by the public utility or common carrier, such
proposed schedule shall be deemed approved by the commission and
shall take effect on the proposed effective date. If the commission has
not issued a final order on the proposed change in any rate, joint rate,
toll, charge or classification or schedule of charges, or any rule or
regulation or practice pertaining to the service or rates of any such
public utility or common carrier, within 240 days after the carrier or
utility files its application requesting the proposed change, then the
schedule shall be deemed approved by the commission and the
proposed change shall be effective immediately, except that:
(1) For purposes of the foregoing provisions regarding the period
of time within which the commission shall act on an application, any
amendment to an application for a proposed change in any rate, which
increases the amount sought by the public utility or common carrier or
substantially alters the facts used as a basis for such requested change HOUSE BILL No. 2225—page 2
of rate, shall, at the option of the commission, be deemed a new
application and the 240-day period shall begin again from the date of
the filing of the amendment,;
(2) if hearings are in process before the commission on a proposed
change requested by the public utility or common carrier on the last day
of such 240-day period, such period shall be extended to the end of
such hearings plus 20 days to allow the commission to prepare and
issue its final order,; and,
(3) nothing in this subsection shall preclude the public utility or
common carrier and the commission from agreeing to a waiver or an
extension of the 240-day period.
(d) Except as provided in subsection (c), no change shall be made
in any rate, toll, charge, classification or schedule of charges or joint
rates, or in any rule or regulation or practice pertaining to the service or
rates of any such public utility or common carrier, without the consent
of the commission. Within 30 days after such changes have been
authorized by the state corporation commission or become effective as
provided in subsection (c), copies of all tariffs, schedules and
classifications, and all rules and regulations, except those determined to
be confidential under rules and regulations adopted by the commission,
shall be filed in every station, office or depot of every such public
utility and every common carrier in this state, for public inspection.
(e) Upon a showing by a public utility before the state corporation
commission at a public hearing and a finding by the commission that
such utility has invested in projects or systems that can be reasonably
expected (1) to produce energy from a renewable resource other than
nuclear for the use of its customers, (2) to cause the conservation of
energy used by its customers, or (3) to bring about the more efficient
use of energy by its customers, the commission may allow a return on
such investment equal to an increment of from 1/2% 0.5% to 2% plus
an amount equal to the rate of return fixed for the utility's other
investment in property found by the commission to be used or required
to be used in its services to the public. The commission may also allow
such higher rate of return on investments by a public utility in
experimental projects, such as load management devices, which it
determines after public hearing to be reasonably designed to cause
more efficient utilization of energy and in energy conservation
programs or measures which it determines after public hearing provides
a reduction in energy usage by its customers in a cost-effective manner.
(f) Whenever, after the effective date of this act, an electric public
utility, a natural gas public utility or a combination thereof, files tariffs
reflecting a surcharge on the utility's bills for utility service designed to
collect the annual increase in expense charged on its books and records
for ad valorem taxes, such utility shall report annually to the state
corporation commission the changes in expense charged for ad valorem
taxes. For purposes of this section, such amounts charged to expense on
the books and records of the utility may be estimated once the total
property tax payment is known. If found necessary by the commission
or the utility, the utility shall file tariffs which reflect the change as a
revision to the surcharge. Upon a showing that the surcharge is applied
to bills in a reasonable manner and is calculated to substantially collect
the increase in ad valorem tax expense charged on the books and
records of the utility, or reduce any existing surcharge based upon a
decrease in ad valorem tax expense incurred on the books and records
of the utility, the commission shall approve such tariffs within 30 days
of the filing. Any over or under collection of the actual ad valorem tax
increase charged to expense on the books of the utility shall be either
credited or collected through the surcharge in subsequent periods. The
establishment of a surcharge under this section shall not be deemed to
be a rate increase for purposes of this act. The net effect of any
surcharges established under this section shall be included by the
commission in the establishment of base rates in any subsequent rate
case filed by the utility.
(g) Except as to the time limits prescribed in subsection (c), HOUSE BILL No. 2225—page 3
proceedings under this section shall be conducted in accordance with
the provisions of the Kansas administrative procedure act.
(h) In any general rate proceeding of an electric public utility
serving more than 20,000 customers conducted pursuant to this
section, the electric public utility shall evaluate and include in its
application for a rate change an assessment of the following: (1) The
regional rate competitiveness of the electric public utility's current and
proposed rates; and (2) the impact of the electric public utility's
current and proposed rates upon economic development within the
state.
Sec. 2. K.S.A. 66-1237 is hereby amended to read as follows: 66-
1237. (a) Any electric utility subject to the regulation of the state
corporation commission pursuant to K.S.A. 66-101, and amendments
thereto, may seek to recover costs associated with transmission of
electric power, in a manner consistent with the determination of
transmission-related costs from an order of a regulatory authority
having legal jurisdiction, through a separate transmission delivery
charge included in customers' bills. The electric utility's initial
transmission delivery charge resulting from this section may be
determined by the commission either from transmission-related costs
approved in the electric utility's most recent retail rate filing or in an
order establishing rates in response to a general retail rate application
by an electric utility.
(b) (1) If an electric utility elects to recover its transmission-
related costs through a transmission delivery charge, such electric
utility shall have the right to implement a transmission delivery charge
through an application to the commission.
(1)(2) If an electric utility proposes to establish its initial
transmission delivery charge other than in connection with an
application to the commission that proposes a general retail rate change
the commission shall, effective the same date as the effective date of
the initial transmission delivery charge, unbundle the electric utility's
retail rates in such a manner that the sum of the revenue to be recovered
from the initial transmission delivery charge and the non-transmission-
related retail rates will be consistent with the revenue that would be
recovered from the retail rates in effect immediately prior to the
effective date of the initial transmission delivery charge.
(2)(3) If an electric utility proposes to establish its initial
transmission delivery charge in connection with an application to the
commission for a general retail rate change, the commission shall, in its
order in such rate proceeding, determine the electric utility's
transmission-related costs related to its service to Kansas retail
customers and determine an initial transmission delivery charge
sufficient to permit the electric utility to recover from its Kansas retail
customers such utility's transmission-related costs incurred to provide
service to such customers.
(c) Except as provided in subsection (d), all transmission-related
costs incurred by an electric utility and resulting from any order of a
regulatory authority having legal jurisdiction over transmission matters,
including orders setting rates on a subject-to-refund basis, shall be
conclusively presumed prudent for purposes of the transmission
delivery charge and an electric utility may change its transmission
delivery charge whenever there is a change in transmission-related
costs resulting from such an order. The commission may also order
such a change if the utility fails to do so. An electric utility shall submit
a report to the commission at least 30 business days before changing
the utility's transmission delivery charge. If the commission
subsequently determines that all or part of such charge did not result
from an order described by this subsection, the commission may
require changes in the transmission delivery charge and impose
appropriate remedies, including refunds.
(d) (1) A for-profit, investor-owned electric utility serving more
than 20,000 customers in Kansas that elects to recover such utility's
transmission-related costs through a transmission delivery charge HOUSE BILL No. 2225—page 4
pursuant to this section may include, as a component of such charge,
the following:
(A) All transmission-related costs associated with transmission
facilities constructed as a result of a notification to construct or similar
directive from a regional transmission organization or independent
system operator that is regulated by the federal energy regulatory
commission, or any successor agency; and
(B) all fees and costs imposed on the electric utility in connection
with the operation of wholesale power markets by a regional
transmission organization, independent system operator or other entity
that is regulated by the federal energy regulatory commission, other
federal agency or any successor federal agency.
(2) A for-profit, investor-owned electric utility serving more than
20,000 customers in Kansas may recover, as a component of a
transmission delivery charge, 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 a regional transmission organization or
independent system operator that is regulated by the federal energy
regulatory commission, or any successor agency, subject to such
utility's compliance with subsections (e) and (f).
(e) To recover the costs described in subsection (d)(2) as a
component of a transmission delivery charge and to facilitate
commissioner and commission-authorized intervenor review, a utility
shall make a compliance filing with the commission prior to the time
period provided pursuant to subsection (f) for the commission to adjust
the return on equity relating to such costs. A compliance filing shall
include all the compliance filing details required by this subsection.
Such utility shall continue to make annual compliance filings to the
commission. Each compliance filing shall provide the following:
(1) For each non-blanket work order transmission project over
$15,000,000, or a different amount deemed necessary by the
commission staff in consultation with the filing utility, an itemization of
projected transmission spending for the succeeding calendar year and
the second succeeding calendar year. The commission may expect a
utility to provide more extensive details for transmission projects in the
succeeding calendar year than for the second succeeding calendar
year, but the utility shall provide as many details as reasonably
possible for transmission projects in the second succeeding calendar
year;
(2) for each transmission project:
(A) A project identifier or name;
(B) the anticipated in-service date;
(C) the projected cost;
(D) the specific location within the utility's system;
(E) whether the project is classified as a new build, rebuild,
upgrade or any other appropriate classification;
(F) a description providing the purpose for the project and the
anticipated reliability benefits;
(G) a description of the original vintage of the replaced facilities
if the project is classified as a rebuild or upgrade; and
(H) the load additions or economic development benefits
accommodated by the project, if any; and
(3) a proposed date and time for:
(A) Representatives of the public utility to conduct a technical
conference for the purpose of discussing the details of the compliance
filing with commission staff, the citizens utility ratepayer board and
other commission-authorized intervenors. Such technical conference
shall be held not later than 90 days after the utility filed the compliance
filing; and
(B) the commission to hold a public workshop in which
representatives of the public utility shall present the details associated
with the transmission projects that are anticipated in the succeeding
calendar year. The public workshop shall allow for questions and HOUSE BILL No. 2225—page 5
comments from the commission, commission staff and other
commission-authorized intervenors. The public workshop shall be held
not later than 120 days after the utility filed the compliance filing.
(f) Beginning January 1, 2024, and prior to April 1, 2024, for any
utility electing to recover the costs described in subsection (d)(2), the
commission shall adjust the return on equity used to determine the
revenue requirement of such costs from the federal energy regulatory
commission's jurisdictional return on equity to the state corporation
commission's authorized return on equity last used to set the utility's
base rates in effect at the time of filing the transmission delivery charge
update. If a return on equity was not explicitly established during the
utility's last general rate case, the commission shall determine an
appropriate return on equity from the record of the last general rate
case to establish the revenue requirement for such costs. The use of the
state corporation commission's authorized return on equity shall not
impact any project that was constructed as a result of a notification to
construct or similar directive from a regional transmission
organization or independent system operator that is regulated by the
federal energy regulatory commission, or any successor agency. In any
transmission delivery charge update filing, a utility electing to recover
the costs described in subsection (d)(2) shall utilize the state
corporation commission'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 commission 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.
Sec. 3. K.S.A. 66-117 and 66-1237 are hereby repealed.
Sec. 4. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the
HOUSE, and passed that body
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE ______________________________________________________________________________
President of the Senate.
Secretary of the Senate.
APPROVED __________________________________________________________________________________________________
Governor.