City looks to ditch Westar as legislature considers mandating rate study

By Jonathan Riley / jriley@morningsun.net
Mar 18, 2019

PITTSBURG — On Tuesday, as the City of Pittsburg reviews two potential contracts related to a plan to take over electric utility service from private provider Westar, the Kansas House of Representatives has a hearing scheduled for a bill which recently passed the State Senate and which would mandate an independent study of electric utility rates.

“There’s been a lot of pressure on Westar to lower their rates,” Deputy City Manager Jay Byers told the Morning Sun on Friday. But the bill -- if passed would require a bipartisan legislative council to select an outside organization to complete an electric utility rate study by 2020 “doesn’t really affect what we’re doing right now,” he added.

Byers pointed out that there are currently 118 public electric utilities in the State of Kansas. According to Kansas Municipal Utilities, an organization representing such providers as well as municipal natural gas, water, wastewater and telecommunications utilities, this means Kansas has the 4th highest number of public power providers of any US state, with 1 in 6 Kansans served by a municipal power utility. The median size of such power providers, however, is a utility serving just 832 customers, while Pittsburg is a city of more than 20,000 people.

If the bill that passed in the Kansas Senate last week becomes law, the Kansas Corporation Commission, which “establishes and regulates rates for public utilities, including electricity, natural gas, liquid pipeline, and telecommunications,” according to its website, “would have to cooperate with any entity hired to conduct the study,” according to a recent Pratt Tribune article. “The report mandated by Senate Bill 69 would be paid for by utility companies, which could pass the cost to consumers.”

But Byers said the study proposed by the bill will not impact Pittsburg’s plan, though that plan, like the bill under consideration in the Legislature, has yet to receive final approval. “As a municipal electric utility, we would not be under the purview of the Kansas Corporation Commission,” Byers wrote in an email. He also said that “state statutes in Kansas are pretty favorable for municipalization,” and maintained that the city could reasonably expect to provide power at lowered rates.

“We have found that Westar’s (Evergy’s) high rates do affect our competitiveness in attracting new business, and it was one of the reasons why we are pursuing municipalization,” Byers wrote.

At the state level, the study proposed by the bill set for a hearing in the Kansas House of Representatives on Tuesday is projected to cost $1 million, but Sen. Rob Olson, (R-Olathe), reportedly “said he was concerned opponents of the study suggested its cost could balloon to over $2 million” and “shared apprehension that deadlines in the bill wouldn’t give consultants sufficient time to complete the first phase of the project in January and the second phase in July 2020.”

At the local level, the Pittsburg City Commission will review and potentially vote Tuesday to approve two consulting contracts related to its municipalization plan, one with law firm Duncan & Allen for an estimated $16,000 to $40,000 of work billed at an average of $400 per hour, and the other with management and utility consulting firm GE Warren Associates for an unspecified total amount of work billed at $175 per hour plus expenses.