HB341: A Deep Dive
We urge you to call the House Natural Resources & Energy Committee and House and Senate Leadership to oppose this bill. Legislative message line: 1-800-372-7181 or email.
Oppose HB 341 to protect consumer rights to fair, just, and reasonable utility rates
HB 341 undercuts ratepayer participation in rate setting
HB 341 creates a new process for utilities to fast track rate increases before the Public Service Commission (PSC) as often as once a year. This proposed fast-track process does away with many of the consumer protections that current rate cases allow, and guts the ability of the Public Service Commission to protect ratepayers from runaway utility costs. Under HB341, consumers or consumer groups would have only 15 days from the date of the application to seek intervention. In comparison, parties that seek intervention under the current law, including commercial, industrial and residential consumer groups, have 30 days from the entry of a scheduling order by the PSC. This shortened timeline will make it difficult, or even impossible, for new groups to do the pre-work necessary to seek intervention. This streamlined process will be broadly available to any utility that has gotten a rate increase through the PSC in the last 5 years.
The participation of those advocates that still manage to intervene on behalf of citizen groups, will be further constrained:
Intervenors will lack access to the information they need to effectively argue their position. Even if a group can get its application in and is allowed to intervene, that intervention is severely limited. Under this bill, intervenors can only seek certain amounts and types of information about the increase. And, once they get that limited information, intervening groups are allowed only to provide comments regarding the proposed rate increase.
Under this bill, the intervenors (and the Public Service Commission itself!) will have no right to hearing. A hearing can be held only at the request of the utility, which is unlikely to ever happen.
Intervenors will not be able to offer any expert testimony or evidence in opposition to a rate increase, and unless the utility requests an evidentiary hearing, there will be no cross examination of the utility’s witnesses. Since the public, including the Attorney General, won't be able to provide evidence, the only evidence that the PSC could decide the case upon would be what the utility produces.
The bill explicitly limits participation for citizens who are served by utilities with less than 250,000 customers. Public meetings on rate changes could be limited to utilities that serve more than 250,000 customers.
HB 341 constrains the Public Service Commission’s ability to review whether utility rate requests are fair, just, and reasonable
The PSC is supposed to balance the rights of consumers to fair, just, and reasonable rates against the rights of the utility to be paid for the cost of service. This bill tips the scales decidedly in favor of the utility both by constraining consumer participation and by severely limiting the PSC’s ability to administer and decide a case.
The bill makes it mandatory that the utility earn the rate of return authorized in the previous rate case instead of permitting the PSC to re-evaluate whether or not it is fair, just, and reasonable for the utility to continue earning that rate of return on new investments (Current law gives utilities the opportunity to earn the return.)
It is also unclear whether the PSC staff would be able to submit any requests for information from the utility, and since intervenors can only ask 50 total questions to "clarify" the utility proposal rather than to demand the data justifying the rate increase request, the utility proposal will have little scrutiny by the PSC or the courts.
Under current law, the PSC has discretion on whether allowing a rate “rider” (a new addition to a customer’s bill) is appropriate, or whether those costs should be recovered in a full rate case. “Riders” have traditionally been allowed by the PSC for discrete and limited proposals for capital investment and recovery that are thought to be in the public interest, such as accelerated replacement of portions of water distribution lines most prone to catastrophic failure, or replacement of gas line risers. HB 341 removes any requirement to justify the need for accelerating cost recovery from ratepayers. The bill directs that the PSC “shall” approve “riders” for a broad set of circumstances including:
Generation, distribution, and transmission infrastructure
Gas pipelines
Water infrastructure
Safety and reliability requirements
Disaster recovery
Economic development related to EVs, utility owned renewable generation, economic development opportunities, and foregone revenues associated with ED riders and rates
Support for ratepayer participation in cases before the PSC should be expanded, not constrained, as energy, water and other utilities are unaffordable for many Kentuckians
Participating as an intervenor in rate cases is already challenging and burdensome for consumer advocates. The time and financial resources required to participate are already insurmountable for many.
The PSC already must balance review of many cases simultaneously which makes it difficult to understand the impacts of a rate request across stakeholders in a given case. Intervenors help ground each case in consumer realities and create greater and more equitable recognition of all those who will be affected by rate changes, thereby allowing the PSC to better comply with its duty to ensure that rates are fair, just, and reasonable.
Energy is considered affordable when all household energy needs amount to less than 6% of total income.[1] According to the Department of Energy Low-Income Affordability Energy Data Tool, on average, energy burden is 11% for low-income households across the state of Kentucky. However, for the lowest income residents, energy burden in some census tracts exceeds 50% of household income.[2]
Water is considered affordable when household water needs amount to less than 2% of total income.[3] A recent analysis of Eastern Kentucky found that for the average usage rate of 4000 gallons/month, water is unaffordable for approximately 2 out of every 5 households.
[1] The 6% affordability threshold is based on Fisher, Sheehan and Colton’s Home Energy Affordability Gap Analysis. For more information, see www.homeenergyaffordabilitygap.com/
[2] See: LEAD Tool | Department of Energy. This average was calculated using Area Median Income at the census tract level for households earning 60% or less of an area’s median income. Also see this report from the Kentucky Office of Energy Policy: Kentucky: Using LEAD Tool Data to Fund Energy Efficiency Programs Where Energy Affordability Assistance Is Needed Most
[3] A burden of 2.5% is used to define affordability based on EPA standards. However, that definition has been criticized and the EPA has made clear that a burden of 2.5% is to be used for assessing
community wide impacts, not affordability for individual households. See report prepared by Roger Colton on behalf of Martin County Concerned Citizens for further justification of this income threshold: https://psc.ky.gov/pscecf/2021-00154/mary%40appalachianlawcenter.org/08252021043813/MCCC_EX_1.pdf.