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.