Legislative pressure builds on utility regulators

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Legislative pressure is mounting on state regulators to more aggressively respond to ongoing investigations into how ratepayers were hit with nearly $1 billion in natural gas bills resulting from a severe cold snap earlier this year.

About two dozen GOP lawmakers – including 13 members of the House and Senate utilities committees – sent a letter to state utility regulators asking them not to pass on high natural gas costs to ratepayers until state and federal investigations are completed.

No one from GOP House or Senate leadership signed the letter.

“Kansas consumers should not be charged for abnormally high gas costs until investigations have concluded,” said the letter to the Kansas Corporation Commission obtained by the Sunflower State Journal.

“This issue impacts residential customers significantly, with some gas utilities seeking to recover about 80% of the high charges from residential consumers.”

It could take years to wrap up any investigation into the sudden spike in gas prices, which could only drive up the overall costs even more.

Meanwhile on Tuesday, lawmakers turned aside a proposal by a Republican lawmaker to expand the Legislature’s power to audit private businesses regulated by the Kansas Corporation Commission – a move criticized by Republicans and Democrats as too broad.

“We don’t want to vilify any gas company here in Kansas,” said Republican state Sen. Mike Thompson, chair of the Senate utilities committee.

“We don’t even know where the tentacles lead, to be honest,” he said.

“If everything is on the up and up and nobody made any mistakes, then that’s good.”

Federal Energy Regulatory Commission Chairman Richard Glick told U.S. senators last week that the agency found a “number of anomalies” that have been referred for further investigation.

“We’re moving forward,” Glick said under questioning from Republican U.S. Sen. Roger Marshall. “It takes a while unfortunately, because we have to go through a lot of data.”

The letter comes at about the same time that Republican state Sen. Caryn Tyson of Parker floated the idea of broadening the scope of legislative auditors to examine businesses regulated by the Kansas Corporation Commission.

On Tuesday, Tyson asked the Legislative Post Audit Committee to direct staff attorneys to write a draft bill that would allow lawmakers to audit businesses regulated by state utility regulators.

Lawmakers are now limited to auditing businesses under the KCC’s jurisdiction for compliance with state laws, regulations and a few other areas.

It is very different from other agencies where legislative auditors have the authority to examine businesses – such as day care centers, for example – regulated by the state.

Thompson specifically cited last winter’s natural gas crisis as an extraordinary situation where an audit of a KCC-regulated business could be warranted.

“If it takes something like that to get to the bottom of that situation where we’ve asked the KCC to do it and they’ve sort of punted, then we need some additional tools to be able to look at,” he said.

Thompson was alluding to the KCC’s recent decision not to subpoena records from a company that influences natural gas prices.

The KCC denied the request from Natural Gas Transportation Coalition, saying that jurisdiction to investigate wholesale market manipulation lies with the Federal Energy Regulatory Commission, which has already opened an investigation.

While the coalition may have legitimate concerns, “this commission is simply not the forum for such an investigation,” the KCC said.

The coalition’s lawyer, Jim Zakoura, had criticized the KCC’s decision.

Zakoura told Kansas News Service that the KCC’s decision was a serious setback for uncovering price gouging.

Zakoura declined to comment on the bill requested that would have broadened the Legislature’s ability to review businesses regulated by the KCC.

The committee rejected the idea of drafting a bill, with some lawmakers saying the idea was overly broad. The committee deadlocked at 5-5 on the proposal.

Republican state Sen. Rob Olson of Olathe suggested that a proposal like the one put forward by Tyson could one day lead to similar laws for businesses regulated by the Securities Commission or the secretary of state.

“This is just really expansive,”  Olson said.  “I really think this bill is just an overreach.”

Democratic state Rep. Jim Gartner of Topeka said Tyson’s proposal would open up any private company to a legislative audit based on the whims of a lawmaker.

“I understand transparency, of course,” Gartner said. “I don’t know what the rush is to pass a bill to allow (the auditor) to go after people regulated by the KCC.”

The lawmakers, in their letter, are requesting the Kansas Corporation Commission to encourage Kansas Gas Service to negotiate with its suppliers to reduce February natural gas to “more closely align with the suppliers’ costs.”

“This type of commercial negotiation is ongoing in the private contract sector, and has begun to show signs of success as suppliers and customers are coming together to address the problem of the high gas prices of last February.”

A Kansas Gas Service spokeswoman didn’t directly respond to the conceptual bill but said the company is undertaking efforts to soften the impact of high gas bills.

“Like all gas utilities, Kansas Gas Service experienced unusually high gas costs during the February 2021 winter storm event,” spokeswoman Dawn Tripp said in a statement.

“We’re currently working with our regulators on a plan to ease the burden of the financial effects of the event on our customers,” Tripp said.

Tyson called the committee’s vote on her proposal “disappointing.”

“We just want to get to the bottom of what happened and protect Kansans,” she said.