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8.5 Electric Rate Policy CITY OF SALINA REQUEST FOR CITY COMMISSION ACTION DATE TIME 9/11/00 4:00 P.M. AGENDA SECTION: ORIGINATING DEPARTMENT: APPROVED FOR AGENDA: NO. 8 CITY MANAGER ITEM 5 ~ NO. BY: Dennis M. Kissinger BY: Item Resolution No. 00-5645 A RESOLUTION ESTABLISHING CITY POLICY CONCERNING ELECTRIC RATE ISSUES BETWEEN KANSAS POWER AND LIGHT & KANSAS GAS & ELECTRIC SERVICE TERRITORIES. Background For some time this year, city staff has been monitoring the complex issues involved in the efforts of areas in south-central Kansas to challenge the current electric rate structure of Western Resources. The City of Wichita has initiated rate complaints through federal and state regulatory agencies. Their goal is "rate parity" between the electric service territory served by Kansas Gas & Electric (KGE), (generally the Wichita area), and the Kansas Power & Light (KPL) territory (Topeka, Lawrence, Manhattan, Salina, Hutchinson). Wichita/KGE rates are substantially higher than KPL areas due to the KGE Wolf Creek nuclear power plant costs. The City of Topeka has for many months assumed the lead role in representing the KPL area interests. This role has included incurring costs in representing all KPL communities' interests before the Federal Energy Regulatory Commission (FERC). In recent weeks, as the issues and federal/state forums have become more clear, Mayor Joan Wagnon and Topeka's legal counsel for this issue have been visiting other KPL communities to share information and request support from those city and county governments. Mayor Wagnon met on August 28 in Salina with Mayor Jilka, Commissioner Mathews and city staff regarding this important matter. Subsequently, Mayor Jilka wrote a preliminary letter of general support, to be followed by City Commission consideration of a formal policy resolution. At this point, nearly 50 communities, including all the largest KPL-served cities have provided letters or resolutions of support to Topeka on this matter. In addition to the briefing attended by two Commissioners, staff has previously provided a memo and background information. The City Commission also received with this agenda item a videotape of the public forum/panel discussion held by the Manhattan City Commission. The latest information on this issue is outlined in the enclosed September 7 article from the Hutchinson News. It appears this matter will go to trial before a FERC judge in Washington, then ultimately to the full FERC. Mayor Wagnon indicated in our meeting here, as well as in other KPL community meetings, that Topeka may in the future request some financial support from KPL communities for the FERC hearing efforts. No requests have been made at this point, and any funding requests will be brought to the City Commission as a separate issue from this Policy Resolution. Action: Consider Resolution 00-5645 establishing city policy on these electric rate issues. Enclosures Hutchinson News Page 1 of 2 s cnoss Electric-rate dispute to go to federal FRONT PAGE .... A1 trial Lo~ ............. A2 REGIONAL ....... A3 0P~ION .......... A4 By Mary Clarkin 0BITUA~ES .... A4 The electric-rate showdown be-tween the cities of Wichita and SPORTS .... ....... BI Topeka will be played out in the nation's capital. ~s~ ...... C 1 THAT'S LIFE ..... !)1 "We're going to trial," said Topeka Mayor Joan Wagnon ASSOCIA~D PR~S in a telephone interview Wednesday afternoon from E~... Washington, D.C. PA~ ISS~S The Federal Energy Regulatory Commission thought the AP ~CKl~ settlement conference in Washington could run two days. S£A~CX ADVERTISER IND~ But it ended after about two hours Wednesday morning. Co~rrACX Us "It didn't take very long before the talks broke down, and the judge (the FERC's Curtis Warner Jr.) announced we're at loggerheads," Wagnon said. Now, a trial before another FERC judge looms, with the city of Wichita pursuing its complaint against Western Resources Inc., while the city of Topeka will insert itself as an intervenor arguing against Wichita's argument that the costs of Wolf Creek Nuclear Power Plant be shared. Wichita lies in KGE territory in south-central Kansas, where power rates are about 25 percent higher than in the KPL region that includes Topeka and Hutchinson and northeastern Kansas. The 1991 merger of KGE and KPL created West-erA Resources Inc., so the utilities have the same parent. Topeka's chief argument is that a Kansas Corporation Commission order at the time of the merger directed that KPL customers not be burdened by the cost for Wolf Creek. Wichita Mayor Bob Knight claims that Wolf Creek is the reason for their hi~her KGE rates but the Burlington nlant http ://www.hutchnews.com/days/thursday/local/local6.html 9/7/00 - Hutchinson News Page 2 of 2 benefits all Wester~ Resources'customers and sto~khoiders. Wagnon has described the KPL-KGE rate debate as "potentially one of the biggest, most divisive issues" seen in Kansas since property reappraisal and school finance formulas. Topeka has borne travel and legal costs as it has spearheaded the fight in KPL territory. Wagnon said she probably would be asking other communities in the region to help pay the expenses to bring expert witnesses to the FERC trial. Attorneys for the parties will confer in a couple of weeks. A date for the trial must be set. Ultimately, the judge will make a recommendation, and the matter will go on to the full FERC. Efforts to reach Knight and Wichita legal counsel Gary Rebenstorf were unsuccessful. Topeka, the KCC and Western Resources all preferred to avoid the FERC trial that lies ahead, focusing instead on the rate case that will be filed in Topeka with the KCC on or by Nov. 29. Wichita, displeased with the KCC reaction to the rate disparity, wanted the FERC trial. Copyright 2000 The Hutchinson News http://www.hutchnews.com/days/thursday/local/local6.html 9/7/00