Starting in December 2017, I'm seeing a new line item on Kansas Gas Service bills called "Environmental Cost Recovery" at $0.034 per therm for all rate schedules. This wasn't in the tariff filings I reviewed last year. Has anyone else noticed this charge? Trying to figure out if this was properly approved by the KCC or if it's something we should be challenging. Amounts are small per customer but add up across large commercial accounts.
Kansas Gas Service - New Environmental Charge Appearing on Bills
Rachel - I'm seeing similar environmental charges pop up on Cincinnati Gas & Electric bills but for much higher amounts. The regulatory trend seems to be allowing utilities to pass through environmental compliance costs without going through full rate cases. Check the Kansas Corporation Commission docket system for any recent environmental cost recovery rider approvals. These often get approved with minimal public notice.
Down here in Texas, CenterPoint Energy got approval for an environmental cost recovery rider in late 2017. It's related to new EPA regulations for pipeline integrity and leak detection programs. The charge started at $0.028 per Mcf and they can adjust it quarterly based on actual compliance costs. Sounds like Kansas Gas got similar approval. Worth checking if the amounts are being calculated correctly.
I've been tracking these environmental riders across the Midwest. Wisconsin Gas got a similar approval in 2017 for $0.041 per therm. The issue is these charges often include costs that should be recovered through base rates, not separate riders. I successfully challenged WEC's environmental rider because they were double-recovering some pipeline replacement costs that were already in base rates from their last rate case.
For what it's worth, I checked the KCC dockets and Kansas Gas Service got approval for Docket 18-KGSG-067-RDR in November 2017. The rider is supposed to recover costs for enhanced leak detection surveys and pipeline replacements required under new federal PHMSA regulations. The $0.034 rate looks correct based on their filed cost projections. However, I'd verify they're not also recovering these costs through other mechanisms.
Thanks Gary, that's the docket I was looking for! Found the approval order. What's concerning is the rider allows quarterly adjustments with only 30-day notice to customers. For my larger commercial clients, this could mean significant bill volatility. One client uses 15,000 therms per month - that's $510 monthly just for this environmental charge, and it could increase with no advance warning beyond a bill message.
Rachel, you might want to file an intervention or request for rehearing on that docket. The quarterly adjustment mechanism sounds overly broad. Missouri PSC typically requires utilities to demonstrate that environmental cost increases are prudent and reasonable before allowing recovery. Kansas should have similar standards. At minimum, request better advance notice requirements for rate adjustments.
One thing to watch for - make sure Kansas Gas isn't collecting the environmental costs through both the rider AND depreciation expense in base rates. I caught Intermountain Gas double-recovering pipeline replacement costs this way. They were depreciating old pipeline in base rates while collecting replacement costs through an environmental rider. Got $180,000 in refunds for one large industrial client.
Just saw this thread. West Virginia has been dealing with similar environmental riders for the past two years. Mountaineer Gas Service has had three different environmental surcharges running simultaneously - one for pipeline integrity, one for leak detection, and one for compressor station upgrades. Total adds up to about $0.12 per Mcf. The regulatory creep on these charges is getting out of hand.
This is exactly why I tell my clients to budget for regulatory cost escalation beyond the base commodity price. These environmental riders, infrastructure surcharges, and system benefit charges are becoming the norm. Arkansas Oklahoma Gas just filed for a similar environmental cost recovery mechanism. We're looking at 5-8% annual increases just from regulatory riders, separate from commodity price volatility.
Good discussion everyone. I've been tracking these environmental cost riders across multiple states for AAUBA's regulatory database. The key is staying on top of the docket filings and challenging excessive or improperly calculated charges before they become entrenched. Rachel, if you need help with the intervention process in Kansas, I can share some template filings that have worked in other jurisdictions. These riders are only going to become more common as infrastructure regulations tighten.