FRANKFORT, Ky. — A Kentucky lawmaker proposed a bill he said would reduce how much people have to pay for utilities, but other industry experts said the legislation would do the opposite.
In order for a utility company to increase base rates consumers pay for gas, water and electricity, they have to get approval from the Kentucky Public Service Commission, the agency that regulates utility companies in the commonwealth.
The process to increase rates can be quite cumbersome, which is why Rep. Jim Gooch, R-Providence, proposed House Bill 341. He said the bill would streamline the rate case process.
Right now, Gooch said utilities often put off asking for rate increases for years because it's an expensive process, and when they finally do, the rate hike can be drastic.
"What you have are rate increases that look like a hockey stick," Gooch said. "They're really hard for people to budget. Your rate goes up drastically and you can't budget for that."
Some industry experts, however, worry HB341 will reduce transparency in the rate-setting process.
"They're going to be filing smaller rate cases every year, and those are going to, over time, amount to just as much rate case expense as a larger rate case every four or five years," said Andrew Melnykovych, the former Kentucky Public Service Commission spokesman. "Additionally they're going to lead to higher rates because there is going to be less scrutiny and less pushback."
Melnykovych said typically, intervenors - third parties in utility rate cases - ask hundreds of questions so they can get a thorough understanding of a utility's finances and operations. This legislation would only allow them to ask utility companies 50 questions about their proposed changes.
“You’re trying to explore every last detail of what that utility is asking for and their justification for it," Melnykovych said. "Fifty questions, which is what the limit would be in one data request, you can’t even scratch the surface with that.”
Gooch said rate cases are costly to utility companies.
“I’m told that if we look at the last six rate cases, those cases total about a billion dollars to actually file and present,” Gooch said.
By speeding up the process, Gooch said he feels it'll save ratepayers money.
"The consumer ultimately pays for the cost of that rate increase, so we feel that a bill like this could actually keep costs down," Gooch said.
Melnykovych, who worked at the commission for 18 years, disagreed and said the cost of the rate cases equates to pennies per month for individual ratepayers.
"Would you rather be paying a tiny portion of your bill to make sure the rate is adequately reviewed and that the people who fight on the customers' behalf have an adequate opportunity to participate in the process, or would you rather somewhat reduce the rate expenses in return for basically giving the utility a blank check," Melnykovych said. "That’s what this boils down to."
Melnykovych said he's concerned this bill would lead to a less transparent process because in most cases, utilities could decide whether or not to hold public hearings.
"You've restricted access to the public, you've restricted access by the interveners and you've potentially, if the utility doesn't want to hold a public hearing, put the whole process behind closed doors," Melnykovych said.
"We have always believed it's healthy to have an open, transparent process offered under the current Kentucky Public Service Commission structure," a spokesperson from LG&E and KU said in an emailed statement. "While it can become burdensome for all participants at times, a transparent process is important for our customers."
HB341 has yet to be debated in committee. Until that happens, it can't be called for a vote on the House floor.
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