Midwest Energy Is Proposing to Self-Regulate in 2013
In 1933, the Kansas legislature made electric cooperatives subject to the jurisdiction of the Kansas Corporation Commission (KCC), giving the Commission authority over rates, rate setting, terms and conditions of service and many other aspects of the utility. Complying with KCC regulations added cost and complexity for cooperatives.
In 1992, the Kansas legislature passed a law allowing cooperatives to be released from most regulatory jurisdiction of the KCC. Since that time, members in 27 of 29 Kansas cooperatives have voted to self-regulate. Midwest Energy is one of only two Kansas cooperatives still fully regulated by the KCC.
To become self-regulated, a cooperative must present a proposition for self-regulation at a meeting of members, followed by a by-mail ballot vote of the co-op's membership. Midwest Energy proposes to have member meetings in March/April 2013, with mail balloting to take place in April/May 2013.
Midwest Energy's Board of Directors and Management support a "Yes" vote for self-regulation.
The Top Benefits of Self-Regulation for Midwest Energy Members
Self-Regulation Enables Local Control
A "Yes" vote for self-regulation removes most decision-making authority from the Kansas Corporation Commission and returns it to the member-elected Board of Directors. All of Midwest Energy's Board members are also customer-owners who, like you, take electric and/or natural gas service from Midwest Energy and have an ownership interest in the co-op's safe and efficient operation. Self-regulation of cooperatives is very similar to the local control exercised by locally-elected city councils or city commissions who oversee city-owned water, sewer, electric and gas systems.
Self-Regulation Improves Efficiency
Rate changes, terms of service and other actions are currently made through KCC "dockets," a complex, expensive administrative process that can take months or years to complete. A "Yes" vote allows your member-elected Board to make decisions to respond quickly to customer needs and market changes.
Self-Regulation Increases Transparency
Self-regulation adds transparency to the rate setting process.
Individual customers are rarely allowed to intervene directly in rate cases at the KCC, which is a cumbersome and potentially expensive measure. Parties to a docket are generally not allowed to address the KCC at the meeting at which the topic is considered for a decision.
Under self-regulation, any action Midwest Energy's Board of Directors takes with respect to changing rates would occur in an open meeting. Midwest Energy must mail notice of any meeting where the Board is discussing and voting on rates to all members at least 10 days before the meeting.
Self-Regulation Lowers Costs
Midwest Energy currently spends approximately $400,000 annually on KCC and Citizens Utility Rate Board (CURB) fees and legal expenses for routine regulatory compliance activities. Self-regulation would negate most of these costs.
Self-Regulation Informational Meetings
Midwest Energy will be holding four public information meetings for members to discuss self-regulation:
Great Bend: Tuesday, Mar. 26, 6:30 p.m.: Barton Community College, 245 NE 30 Rd, Fine Arts Bldg., Room F30, Great Bend, Kansas
Colby: Thursday, Mar. 28, 6:30 p.m.: Colby Community College, 1255 S Range Ave, Student Union, Room 108, Colby, Kansas
Scott City: Tuesday, April 2, 6:30 p.m., Scott County Library, 110 W. 8th St., Scott City, Kansas
Hays: Thursday, April 4, 6:30 p.m., Robbins Center, Fort Hays State University, One Tiger Place, Hays, Kansas.
Frequently asked Questions About Self-Regulation
Q: Will members have a voice in setting new rates?
A: Yes. The Board of Directors has established a policy that governs the process to change rates, adding more opportunities for member information and feedback. Two of the steps included in the policy are also required by Kansas law. First, notice of the time and place of any Board meeting when rates will be discussed and voted on must be sent to members 10 days before the meeting, and that meeting must be open to members. Second, any rate change must include a notice to Members of their right to petition the KCC to review rate changes. This topic is addressed in Midwest Energy's policy on rate changes, which takes effect upon a successful self-regulation vote.
Q: What if I have a dispute about my bill or quality of service?
A: Midwest Energy already attempts to resolve complaints at the earliest opportunity. That will not change, so Midwest Energy employees will continue to be the first line of contact for service and account issues. However, members may escalate unresolved complaints to management and the Chair of the Board of Directors. The Board has adopted a policy on handling member complaints, which takes effect upon a successful self-regulation vote.
Q: Will self-regulation impact Midwest Energy's use of renewable energy?
A: No. Midwest Energy is one of Kansas' leaders in terms of the proportion of renewable energy in its power supply mix. The Kansas law that mandates minimum requirements for renewable energy would remain in effect.
Q: Will self-regulation eliminate all regulatory requirements?
A: No. Midwest Energy will continue to be subject to other State and Federal environmental, safety, reliability and labor regulations even after self-regulation.
Q: Would the KCC retain any authority over Midwest Energy if members decide
A: Yes. Certain functions would remain under KCC authority, regardless of how members vote. These include: (1) gas pipeline safety regulation; (2) "wire stringing rules" for electric safety; (3) service area boundaries; (4) wholesale power sales to other utilities; (5) rates for use of the high voltage transmission system, and (6) rules regarding line siting for transmission lines 230kV and higher, or transmission lines longer than five miles.
Q: Do any utilities other than cooperatives self-regulate as a form of local
A: Yes. With only minor exceptions, city-owned gas, electric, water and sewer utilities operate without KCC rate regulation. One of the major differences is that self-regulated cooperative customers have the right to appeal rate decisions to the KCC.
Q: Will Midwest Energy still have a Cold Weather Rule to prevent service disconnection
in the winter?
A: The Cold Weather Rule (CWR) is currently mandated by the KCC. Midwest Energy would maintain this important protection for residential customers under self-regulation. No changes have been proposed. The Board of Directors has adopted a policy that governs changes to Terms and Conditions of Service.
Q: Will Midwest Energy members make the decision on adopting self-regulation?
A: Yes, Kansas law requires a cooperative's members to vote for self-regulation by mail-in ballot. Midwest Energy has engaged the independent accounting firm of Adams, Brown, Beran & Ball of Hays to tally the mail-in ballots in early May.
Q: What if members don't like the effects of self-regulation later?
A: The same Kansas law that allows for self-regulation also allows the return to full KCC regulation if Members make that choice.
Q: What laws make self-regulation possible?
A: State of Kansas statutes have allowed electric cooperatives the option to self-regulate since 1992. Currently, 27 of Kansas' 29 electric distribution cooperatives are self-regulated. The enabling legislation is K.S.A. 66-104d for electric cooperatives and K.S.A. 66-104g for natural gas cooperatives. City-owned gas and electric systems are regulated entirely on a local basis without KCC jurisdiction per K.S.A. 66-104(b). The only exceptions are for city services provided more than 3 miles outside city limits.
Q: How can I learn more?
A: Midwest Energy will be conducting a series of public information meetings for interested members. The dates and locations of these meetings are listed above.
If you have additional questions regarding self-regulation, please contact Mike Morley, Midwest Energy's Corporate Communications Manager, at (785) 625-1463.