The Kansas Corporation Commission rejected a request from three Kansas gas companies and stuck to its original ruling that they need to speed up the process of replacing obsolete pipeline considered a safety risk.
The KCC last week rejected a petition for reconsideration from Atmos Energy, Black Hills Energy and Kansas Gas Service, enforcing their original requirement that the three return to the commission with a tentative accelerated replacement plan within three months and a final plan in six months. Commissioner Shari Feist Albrecht dissented from the opinion, as she did from the original ruling.
“The Commission rejected the parties’ proposals because in the Commission’s view those proposals did not provide sufficient oversight over the Gas Utilities’ replacement efforts, did not adequately balance the needs of shareholders and ratepayers and did not provide a sufficient benefit to ratepayers in the form of increased public safety to justify the expense,” the KCC ruling said.
In September, the KCC ended a years-long look at whether Kansas gas companies needed to tackle the obsolete pipeline in their systems at a faster rate and whether they needed additional funding mechanisms to get the work done. The commission, in a two to one vote, determined that an alternative rate mechanism allowing the companies to recoup funds at up to 40 cents per month per customer would be adequate; the KCC also told the three to return in three months with a 10-year plan to replace unprotected and bare steel pipes.
Atmos Energy had testified that at its current rate of replacement, it would take the company 187 years to replace all of its obsolete pipes.
The companies filed a petition for reconsideration, each outlining separate issues with the KCC ruling. Problems ranged from the 10-year time period, the 40-cent cap of the rate mechanism and what two of the companies felt were “arbitrary and capricious” opinions in the ruling about their operational safety.
“Blacks Hills requested reconsideration of any findings suggesting Black Hills’ natural gas distribution system is not safe or that the gas utility has not shown a commitment to the operational safety of its system,” the Oct. 26 filing said.
Atmos was even more forthright: “Atmos asserted the Commission’s concern that Atmos’ system may be at imminent risk of catastrophic failure and that Atmos places a higher emphasis on shareholder profits than on customer safety is unsupported by the evidentiary record.”
The commissioners, however, disagreed.
“Had Atmos and Black Hills attempted to demonstrate to this Commission that they had undertaken serious efforts to significantly accelerate the pace of replacement prior to seeking an alternative rate mechanism to reduce regulatory lag to the benefit of the shareholders, the Commission might be more sympathetic today,” their rejection of the companies’ appeal said.
KGS, which has a significant pipeline replacement plan in place, questioned the 10-year replacement pace and whether the 40-cent mechanism would cover such a mandate.
The petition for reconsideration was the final step the three gas companies have to appeal to the KCC. Any further action would require filing with the Kansas Court of Appeals.
Dawn Tripp, spokeswoman for KGS, said the company is still reviewing the commission ruling and has no comment at this time.