Utility Double Whammy as KGS Joins the 2018 Rate Hike Request Bandwagon

by Allen Williams


Kansas Gas Corporation is back for another rate increase in just two years, Docket No.:18-KGSG-560 RTS   The last one having been approved in 2016.  KGS is a subsidiary of ONE Gas.  ONE Gas Inc is another large conglomerate supplying Oklahoma, Eastern Kansas and parts of Texas where guaranteed levels of income are desired regardless of overall consumption.    

Breitbart reports that Electric, Gas, and Water Rates Falling Due to Trump Tax Cuts 

“The Tax Cuts and Jobs Act cut the corporate rate from 35% to 21%.. Utility companies are passing on the tax savings in the form of lower rates for customers,” – Americans for Tax Reform.

But this phenomenon is apparently not true in Kansas where utility rates continue to rise.  

The ONE Gas financial report at http://investor.onegas.com/news/news-releases/news-details/2018/ONE-Gas-Announces-First-quarter-2018-Financial-Results/default.aspx  shows:

Net margin increased by $0.8 million compared with first quarter 2017, which primarily reflects:

  • A $5.1 million increase from new rates primarily in Texas and Kansas;
  • A $2.5 million increase from the impact of the weather-normalization mechanisms in Kansas and Oklahoma;
  • A $2.5 million increase due primarily to higher transportation volumes;
  • A $1.2 million increase attributed to net residential customer growth in Oklahoma and Texas;
  • A $0.9 million increase due to a compressed natural gas excise tax credit that was enacted in February 2018 and retroactive to 2017; and
  • A $0.8 million increase in rider and surcharge recoveries due to a higher ad-valorem surcharge in Kansas, which is offset with higher regulatory amortization expense; offset by
  • A $12.3 million decrease related to the deferral of potential refund obligations from the Tax Cuts and Jobs Act of 2017.

So KGS admits revenues are up from a combined increase in Texas and Kansas but it’s NOT enough! There appears to be no end to KGS rate and new cost factor requests, the latest being the Kansas  Gas System Reliability Surcharge which now is to include Cyber attacks.  Why not include impact from the stock market impact in a cost factor as well?

SOURCE:  http://investor.onegas.com/investors/financial-reporting/earnings-and-guidance/default.aspx

 “ONE Gas 2018 net income is expected to be in the range of $167 million to $178 million, or $3.15 to $3.35 per diluted share. The midpoint for ONE Gas’ 2018 net income guidance is $172 million, or $3.25 per diluted share.”

Requests for Kansas utility rate increases are a revolving door chiefly to guarantee satisfactory dividends to ONE Gas investors.  The current KGS request increase is a 10% rate hike to consumers when inflation currently stands at 2.3%.

Is there ANYTHING the rate payer is NOT being asked to fund?  Where is the promise of lower rates to get the earlier rate increase approvals?  Just lies as the market for gas has improved revenues rather than diminished them. Instead rate payers are asked to pay dividends of $3.35 a share. But why stop there? Why not $5.15 or even $10 a share? 

General Motors a for profit corporation is paying just $0.38 cents per share as of their 1st Quarter 2018 financial report:  http://quote.morningstar.com/stock-filing/Quarterly-Report/2018/3/31/t.aspx?t=:GM&ft=&d=8ba56ee4bdd422dcb28a39f579bc9cda while Kansans are forced to pay dividends in the dollar range. WHY?

Extraneous surcharges mask the true price users pay for gas services and in effect are automatic rate bumpers that increase consumer bills unfairly for such things as weather, reliability etc. It is an effective hedge against conservation.  These charges are designed to keep utility bills from advantaging consumers by being too low.  The KGS COG delivery charge is an example.   In Sept of 2018 the service charge was 0.4 MCF at a stated rate of $3.85 per 1000 ft3. 

Extraneous surcharges mask the true price users pay for gas services and in effect are automatic rate bumpers that increase consumer bills unfairly for such things as weather, reliability etc. It is an effective hedge against conservation.  These charges are designed to keep utility bills from advantaging consumers by being too low.  The KGS COG delivery charge is an example.  In Sept of 2018 the service charge was 0.4 MCF at a stated rate of $3.85 per 1000 ft3. 

This $0.4*1000 ft3 * $3.8523/1000 ft3 = $1.54 COG

So the ratio of gas consumption to the charge for providing it is $16.70/$1.54 or 10.84 nearly 11 times the cost of the gas which illustrates my point.  Now KGS wants to increase the delivery service charge from $16.70 to $22.66 which is $22.66/ $1.54 or 14.7 times the cost of the gas.

The result is that KGS customers will pay nearly 15 times as much for the gas to be delivered to their home as for the actual gas consumed not to mention all the other ‘hedge factors’.  The rest of the bill is local taxes.  When service charges exceed the cost of a product by double digits the company is gouging consumers.

BreitBart continues:  “Thus far, ATR has found 102 utility companies that have lowered rates or ceased rate hikes due to President Trump’s tax cuts.”

Why do ONE Gas/KGS customers have to fund dividends at a higher rate than General Motors, #21 on the 2017 fortune 500 list despite a record federal tax cut?

I seriously question the company’s claim that it has “experienced increases in payroll expenses and supplier costs” to justify their current rate request. These cost claims appear to be creative paper expenses towards the end of providing investor dividends.

102 other utilities have either decreased rates or ceased rate requests but not Kansas?  

Commission Consultants are not tantamount to citizen ratepayer oversight of a regulated monopoly

The KGS rate increase is nothing short of rubber stamp legalized robbery.


Kansans in for another Sizeable Rate Increase from KCPL (Updated)

by Allen Williams



I received a card several days ago from KCPL notifying customers of another pending rate increase (Docket No 18-KCPE- -480-RTS) before the Kansas Corporate Commission (KCC). What is proposed for those using 1.366 kilowatt-hours in summer months or 833 Kilowatt-hours in winter will see a $7.29 per month increase excluding property tax rebasing and $9.19 per month including property tax rebasing.  It’s approximately a 4.5 percent increase while inflation is only 2.9% that will go into effect Dec 2018. The KCPL 'justification' lists the Tax Cuts and Jobs Act as a reason for a decrease in KCPL's revenue requirement."  The rate proposal sounds like an opportunity for the utility to cash in on the Trump tax cut and recover lost revenue from not being able to hire illegal aliens. 

Ratepayers should keep in mind that KCPL is part of not only Westar but Great Plains Energy also.  Retirees and low income people will be hard pressed to pay the higher rates which should work well for cities like Overland Park who have the desire for upward development.

What was promised from the first KCPL merger?

Fox4KC reports:  “They moved out right at the time KCP&L was changing its billing, aimed at improving the amount customers on budget billing paid per month.  So the Dehnckes got hit with a higher monthly amount plus the yearly adjustment for what their past payments hadn't covered. The result was a whopping $900 bill. "I never had an electricity bill that high. I thought that was a misunderstanding," Dehncke said.”

KCPL already gets additional rate surcharges from ECA Energy cost Adjustment) for FUEL expenses between Billing Cycles, EER (Energy Efficiency Rider you Pay for inefficiencies KCPLdoesn't), PTS (property tax surcharge),TDC (time of day power usage between months). And lest we forget, local government also profits from KCPL rate increases with Overland Park Franchise fee, Overland Park Sales Tax (1.125%) and Johnson County Sales tax (1.475%)

KCPL has forced acceptance of their Smart meters which feature two way communications that would allow them to adjust their cost factors like ECA, EER at will.  According to the Daily Telegraph Smart energy meters are giving readings up to six times too high, a study finds.  You won’t get any credit from the utility, 5000 Utility Customers Class Action Lawsuit Claiming Overbilled 30% to 582%, you will have to sue.

According to the Topeka Capitol Journal: “Officials at Westar Energy and KCP&L say the two companies' merger will provide 15 years of rate stability, and they reject the idea that lawmakers are confused by the complexities of utility regulations.”

That promise didn’t take long to break, just nine years later they’re looking for another major increase. Don't think you can cut electric usage and save money, it just spurs further KCPL rate requests.

The Topeka Capitol Journal further notes; “[Kansas Industrial Consumers Group, which represents large-scale energy users are] ..some of the biggest users of electricity in this state. And their rates, overall, are about 40 percent less than what you and I pay and other businesses pay as consumers. And those dollars, that rate decrease for them, comes directly out of our pockets. Somebody pays for the cost of the system."

Please, utilities aren’t benefiting this industrial conglomerate out of their own pockets. The industrial group has negotiated a better deal based on the large quantities of power consumed.  Lawsuit threats also help to swing a better deal which means the residential consumer is going to wind up paying.

What was promised in the second KCPL merger?

The goal of any energy conglomerate is to control supply as a regulated monopoly and to generate profits as stated in the MERGER TO FORM LEADING ENERGY COMPANY, January 2018 Investor Update.  Great Plains is part of the Sustainable Energy program which includes the UN’s sustainable development program.  The sustainability includes expensive wind power turbine purchase and use at KCPL’s Spearville location as a condition of not being sued by the Sierra club. By the way, KCPL has to pay the people who add power to the grid with their wind turbines which means consumers have to reimburse KCPL.

“the expected financial and operational benefits of the merger to the companies and their shareholders (including cost savings, operational efficiencies and the impact of the anticipated merger on earnings per share..”

Projected net savings from the investor update for the Great Plains Energy conglomerate were stated as 27.8 million in 2018, 110.3 million in 2019 and 143.5 million in 20120.

But these saving were never intended to benefit consumers, they were promises made to the utility investors.  So consumers will have to make good on those promises of investor returns as a condition of being a KCPL customer.  It boils down to the ratepayer being on the hook for company ROI with the full blessings of the utility oversight board.

The 3 member KCC board is made up of political appointments by the Kansas Governor.  It’s a cozy opportunity for various consultants to make their way on to the commission as in the case of Michael C. Moffet, a Lawrence Kansas communications consultant appointed by then Governor Kathleen Sebelius. Consultants are not tantamount to citizen ratepayer oversight of a regulated monopoly and what do communications consultants know about utility management?

The commission makeup is therefore less inclined to regard the complaints of ordinary citizens as in “the Kansas Corporation Commission denied a request to offer public comment [regarding injection wells in Douglas County at that hearing from a Mission Hills woman who has argued that the permitting process being used does not comply with federal rules under the Safe Drinking Water Act.

No public comment is necessary even if federal laws are violated. You can ‘trust’ the respective companies to provide all the ‘necessary’ evidence.

Comments on the proposed KCPL rate hike will be accepted through Oct 17, 2018 up to 5:00pm

Correspondence may be addressed to KCC Commission, Office of Public Affairs and Consumer Protection, 1500 SW Arrowhead Road, Topeka, KS  66604-4027 or call at 1-800-662-0027 or the commissions website at www.kcc.ks.gov

There is a petition for an independent audit to verify KCPL numbers claimed for the rate increase.  For those of you who have had enough as I have please sign the online petition at online petition.