Update: 10:57 a.m.
A Senate bill that would fast track utility rate cases and limit oversight from state regulators will not move forward, according to sponsor Republican Senator Brandon Smith.
Smith said Tuesday “staff” included the bill as a placeholder in case the slot was needed after the filing deadline earlier this month.
“It’s not going anywhere, I didn’t even look at what the language was,” Smith said adding later, “So it’s not really a bill. It’s just a slot there should I need a bill and I would have one available for me to put language into it.”
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The Republican senator behind this year’s “net-metering” bill has introduced a measure that would fast track rate cases and limit oversight from state utility regulators.
The measure would create a new section of state law that would allow utilities to use “alternative regulatory methods” in lieu of general rate-case proceedings.
The Kentucky Public Service Commission is designed to balance needs of utilities against the needs of customers, but the bill could potentially tip the scales in favor of power companies, said Public Service Commission Spokesman Andrew Melnykovych.
“I think the core concern with this piece of legislation is that it essentially appears to entitle utilities to earn a steady rate of profit essentially in perpetuity,” he said, adding later: “And if you essentially put that process on autopilot, there is no real incentive for the utility to control its costs.”
Melnykovych said that in some cases the commission has agreed to make the rate-setting process less onerous for small utilities, but that doesn’t necessarily mean it should apply equally to large investor-owned utilities.
It’s not immediately clear who was involved in drafting the legislation.
Both the Public Service Commission and Louisville Gas & Electric said they were “reviewing” the legislation after initial calls for comment. The Public Service Commission has since voiced its concerns to Smith.
LG&E Spokeswoman Natasha Collins said the utility isn’t opposed to “alternative rate making” but thinks there needs to be more discussion on the topic.
Critics say the measure would limit consumer voices in future rate cases.
Environmental Attorney Randy Strobo said the bill would not only short-circuit the amount of time the commission is given to scrutinize rate cases, it would also limit those who intervene on behalf of ratepayers, like advocates for low-income residents.
Strobo agreed SB 255 would substantially transform the rate-making process, guaranteeing utilities a set rate of return instead of merely the opportunity to get a rate of return.
“Under this bill they are going to be allowed to experiment a little bit and they are going be able to build some projects that they necessarily don’t need,” Strobo said. “And while they are doing that, this bill would essentially allow utilities to recover the cost and get a rate of return on those projects, even if they are not successful.”
Louisville Climate Action Network Executive Director Sarah Lynn Cunningham said the bill removes ratepayer protections and empowers utilities to exploit consumers.
“I argue somebody needs to be in the middle of this fight working it all out, not just letting utilities do whatever they want,” she said. “They’re greedy.”
The bill was introduced February 15 and was referred to the Senate natural resources committee last week.
This story has been updated.