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‘There’s too much profit’: customers decry proposed natural gas rate increase

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‘There’s too much profit’: customers decry proposed natural gas rate increase

Jun 14, 2024 | 11:49 am ET
By Allison Kite
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‘There’s too much profit’: customers decry proposed natural gas rate increase
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The Calista Compressor Station serves the Kansas Gas Service's network in Kansas. The utility is requesting approval from the Kansas Corporation Commission to increase customers' rates. (Kansas Gas Service)

Considering an increase in natural gas rates is unnecessary and unconscionable as families struggle with inflation, Kansas residents told utility regulators and executives Thursday evening. 

For about an hour, customers of Kansas Gas Service questioned the need for a proposed increase and argued the company was lining its pockets with no real benefit to customers. 

“There’s too much profit in Kansas Gas — and greed,” said Beverly Jensen LaBonte, who said her husband works for the utility. “People can’t afford this.”

With 648,000 residential customers, Kansas Gas Service is the state’s largest natural gas utility. In March, the company filed a request with the Kansas Corporation Commission to increase the base rates it charges customers to bring in an additional $58.1 million annually. It also asked to increase a gas reliability surcharge to bring in another $35 million. 

The company wants to create two different rate structures based on how much gas customers use. Customers could choose between a 10.41% rate hike — about $6.71 each month — if they use less than 73,000 cubic feet per year or an 8.25% rate increase if they use more. Kansas Gas Service estimates the smaller rate hike would increase bills by about $9.48 per month because of the greater usage. 

As a monopoly utility, Kansas Gas Service must make the case that its rates are reasonable and receive regulators’ approval to increase them. Typically, public utilities seek to recoup investments in equipment or facilities through rate cases. 

On Thursday, at the Kansas Corporation Commission’s first public meeting on the rate hike, Kansas Gas Service attorney Robert Vincent said the company was requesting the change to increase its return on the investments it has made in the gas distribution system. Right now, he said, the company is making about 2.61% on its investments.

“Our argument is straightforward,” he said. “We think those scales that we’re trying to balance have come out of balance, and we need to adjust our rates to provide a fair return and also maintain affordable service to our customers.”

In testimony filed with the Kansas Corporation Commission, the company’s vice president of operations, Sean Postlethwait, said since the company’s last rate case, it had invested more than $600 million to “deliver safe, affordable and reliable natural gas to its customers.”

But increasing customers’ rates to give Kansas Gas Service a greater profit didn’t sit well with customers at the hearing. 

“Let’s not pretend that the people making the decision to raise these rates know what it feels like to have (a) utility bill go up and just be left to figure it out,” said Jonathan Smith, who noted that executives at Kansas Gas Service make more than $1 million every year. 

Smith said the company had “a bit of a need to tighten your own belt, Kansas Gas Service.”

“Someone has gotten a little loose with their administrative costs and debt financing,” Smith said, “and I didn’t realize that was a me problem.”

David Nickel, executive director of the Citizens’ Utility Ratepayer Board, which advocates for residential and small commercial utility customers, said CURB was still reviewing the rate case and preparing its testimony. However, he said the board was concerned with the large increase and customer charges as well as the dual rates.

Staff of the KCC, CURB and other interested parties have until July 1 to file testimony concerning the proposed rate increase. Members of the public can submit written comments via the KCC’s website until early August or write to the commission at 1500 SW Arrowhead Road, Topeka, KS 66604-4027. They can also call the commission at 800-662-0027.

The KCC will hold a second public meeting Monday at 6 pm. in the Lowe Auditorium at the Hughes Metropolitan Complex in Wichita. Those who can’t attend in person can register to attend via Zoom by noon Sunday.