Session of 1997
HOUSE BILL No. 2320
By Representative Sloan
9 AN ACT concerning natural gas service; relating to retail service areas;
10 providing for determination of certain rates and charges.
12 Be it enacted by the Legislature of the State of Kansas:
13 Section 1. As used in sections 1 through 8:
14 (a) ``Block'' means a natural gas customer service block designated by
15 the commission under section 3.
16 (b) ``Broker'' means any person or entity buying, aggregating, mar-
17 keting or brokering, or offering to buy, aggregate, market or broker nat-
18 ural gas, at wholesale or for retail sale to the public in this state.
19 (c) ``Commission'' means the state corporation commission.
20 (d) ``Distribution'' means the business of distribution of natural gas
21 or the ownership, operation or control of distribution facilities.
22 (e) ``Distribution facility'' means any plant or equipment, other than
23 a transportation facility, that is used for the distribution of natural gas.
24 (f) ``Production'' means the business of producing natural gas for sale
25 at wholesale or for retail sale to the public.
26 (g) ``Retail natural gas supplier'' means any person or entity furnish-
27 ing or offering to furnish retail natural gas service in this state.
28 (h) ``Transportation'' means the business of transporting natural gas
29 or the ownership, operation or control of transportation facilities. ``Trans-
30 portation'' does not include delivery of natural gas service to a retail cus-
32 (i) ``Transportation facility'' means any plant or equipment used for
33 the transportation of natural gas that is under the jurisdiction of the Fed-
34 eral Energy Regulatory Commission.
35 Sec. 2. On and after January 1, 1999, the commission shall continue
36 to have jurisdiction to regulate distribution as a public utility.
37 Sec. 3. (a) Subject to the provisions of this act, the commission shall
38 cause the state to be divided into natural gas customer service blocks and
39 shall assign all areas of the state to a block. In designating blocks, the
40 commission shall work in cooperation with existing natural gas utilities
41 and, to the extent practicable, shall: (1) Follow existing infrastructure for
42 the transportation and distribution of natural gas service; and (2) include
43 in each block both residential customers and commercial and industrial
1 customers of various sizes. No customer within a block shall purchase
2 natural gas service from anyone other than the retail natural gas supplier
3 authorized to serve that block.
4 (b) Any retail natural gas supplier desiring to serve customers in a
5 block after December 31, 1998, shall file with the commission proposed
6 rates for all classes of customers within the block. The proposed rates
7 shall be filed on or before June 30, 1998, and shall be for a period of not
8 less than three years nor more than five years. The commission shall
9 evaluate proposed rates filed by a retail natural gas supplier under this
10 section and shall determine whether all customers in the block will benefit
11 from service by the supplier, taking into consideration all factors, includ-
12 ing economic benefits to customers and reliability, efficiency and quality
13 of service. The commission shall also determine the reasonableness of
14 charges to the retail natural gas supplier for other suppliers' previous
15 capital investment in facilities and equipment for delivery of natural gas
16 to customers within the block. Within 120 days after the date that the
17 proposed rates are required to be filed with the commission, the com-
18 mission shall enter an order authorizing a retail natural gas supplier to
19 serve the block and establishing the rates to be charged each class of
20 customers in the block and the conditions that the supplier must meet if
21 the supplier is going to provide retail natural gas service to customers in
22 the block. Those conditions shall include any requirements agreed upon
23 by the commission and the supplier but shall include at a minimum a
24 requirement that:
25 (1) No regulation, practice or act affecting or relating to any service
26 performed or to be performed by the supplier for the supplier's customers
27 shall be unreasonable, unfair, unjust, unreasonably inefficient or insuffi-
28 cient, unjustly discriminatory or unduly preferential; and
29 (2) no service performed or to be performed by the supplier for the
30 supplier's customers shall be unreasonably inadequate, inefficient, unduly
31 insufficient or unavailable.
32 (c) Before expiration of the rates of a retail natural gas supplier au-
33 thorized to serve a block pursuant to subsection (b), the commission shall
34 provide for the filing of proposed rates by retail natural gas suppliers
35 desiring to serve the block and shall determine the supplier which will
36 serve the block in the same manner as provided by subsection (b).
37 (d) If no retail natural gas supplier files proposed rates for a block,
38 the retail natural gas supplier most recently serving the block shall con-
39 tinue serving the block at rates approved by the commission.
40 (e) The commission may require any natural gas service provider to
41 file with the commission a performance bond conditioned on the sup-
42 plier's reliable delivery of quality natural gas.
43 Sec. 4. (a) The commission, with or without notice, may make any
1 investigation that the commission determines necessary either on the
2 commission's own motion or on the filing with the commission of a written
3 complaint alleging that a retail natural gas supplier has violated the rates
4 or conditions established by the commission's order authorizing the sup-
5 plier to serve a block.
6 (b) If, after notice to the retail natural gas supplier and any complain-
7 ant and a hearing in accordance with the provisions of the Kansas admin-
8 istrative procedure act, the commission determines that a retail natural
9 gas supplier has violated the rates or conditions established by the order
10 of the commission that authorized the supplier to serve a block, the com-
11 mission may enter any remedial orders that the commission determines
12 to be just, reasonable and necessary. Such orders may include, if appro-
13 priate, an order revoking the supplier's authority to serve any or all blocks
14 in the state for a period of not more than 10 years.
15 (c) All orders of the commission issued under this section shall be
16 served on the retail natural gas supplier affected by the order. The order
17 shall become effective on the date established by the commission but not
18 less than 30 days after service of the order.
19 Sec. 5. (a) The commission shall regulate all brokers for the purpose
20 of ensuring reliable customer service and the integrity of transportation
21 and distribution systems.
22 (b) (1) Each broker, before engaging in business as a broker, shall
23 be licensed by the commission. The broker shall file with the commission
24 a notarized application that includes the following information and any
25 additional information required by the commission pursuant to rules and
26 regulations adopted by the commission to protect the public interest: (A)
27 The legal name and business address of the broker; (B) the state where
28 organized, date of organization and articles of incorporation, association,
29 partnership agreement or other similar document regarding legal organ-
30 ization; (C) the name and business address of all officers and directors,
31 partners or other similar officials; (D) the name, title and telephone num-
32 ber of a customer service contact person; (E) the name, title and tele-
33 phone number of a regulatory contact person; (F) the name, title and
34 address of the registered agent for service of process; (G) a brief descrip-
35 tion of the nature of the business being conducted; and (H) evidence,
36 satisfactory to the commission, of the broker's financial responsibility to
37 meet the requirements of customer service and the transportation and
38 distribution systems. An amended license application shall be filed within
39 10 days after any change in the information included in the application
40 as filed or previously amended.
41 (2) A license application shall become effective 30 days after filing
42 with the commission unless rejected by the commission during that pe-
43 riod. The commission, if it rejects the application, shall specify in writing
1 the reasons for rejection.
2 (3) After notice and an opportunity for hearing in accordance with
3 the Kansas administrative procedure act, the commission may suspend or
4 revoke a broker's license for cause.
5 Sec. 6. (a) The commission shall adopt, for implementation and en-
6 forcement on and after January 1, 1999, tariffs for the use of distribution
7 facilities in this state. The tariffs shall be based on volume of natural gas
8 distributed and shall be in amounts determined by the commission to be
9 necessary for the purposes provided by subsection (b). The tariffs shall
10 be collected by the person engaging in distribution and paid by that per-
11 son to the commission. The commission shall remit the entire amount
12 collected to the state treasurer, who shall deposit it in the state treasury
13 and credit it to the natural gas energy programs fund.
14 (b) There is hereby established in the state treasury the natural gas
15 energy programs fund. Moneys credited to the fund shall be expended
16 only for the purposes of assisting individuals qualified for public assistance
17 to pay the costs of natural gas service, paying compensation to natural gas
18 service providers of last resort, and encouraging research in and devel-
19 opment of alternative residential heating and cooling technologies, giving
20 priority to resident researchers and developers. Expenditures from the
21 fund shall be made in accordance with appropriation acts upon warrants
22 of the director of accounts and reports issued pursuant to vouchers ap-
23 proved by the chairperson of the commission or a person designated by
24 the chairperson. On or before the 10th day of each month, the director
25 of accounts and reports shall transfer from the state general fund to the
26 natural gas energy programs fund interest earnings based on:
27 (1) The average daily balance of moneys in the natural gas energy
28 programs fund for the preceding month; and
29 (2) the net earnings rate of the pooled money investment portfolio
30 for the preceding month.
31 Sec. 7. (a) An area served by a natural gas municipal utility shall not
32 be included in any block and such utility shall continue to serve such area
33 if the voters of the city vote to exempt the utility from this act in the
34 manner provided by this section.
35 (b) To be exempt under this section, a city shall hold an election as
37 (1) An election under this subsection may be called by a majority vote
38 of the governing body of the city or shall be called not less than 180 days
39 after receipt by the city clerk of a valid petition signed by not less than
40 10% of the registered voters of the city.
41 (2) The proposition for exemption of the city shall read: ``Shall the
42 (name of the city) be exempt from the provisions of Kansas law relating
43 to retail competition in natural gas service?'' The proposition shall be
1 printed at the top of each page of any petition filed under this subsection.
2 (3) The proposition for exemption shall be submitted to the regis-
3 tered voters of the city at a special election to be called for that purpose
4 and to be held not later than 180 days after the vote of the governing
5 body or the filing of the petition or at the next regular city election or
6 general election which will occur not less than 60 days and not more than
7 180 days after the vote of the governing body or the filing of the petition.
8 The election shall be conducted, and the votes counted and canvassed,
9 in the manner provided by law for question submitted elections of the
11 (4) If the proposition for exemption of the city is approved by the
12 affirmative vote of not less than a majority of the qualified voters voting
13 on the proposition, the governing body shall notify the state corporation
14 commission in writing of the results within 10 days after the date of the
15 final canvass of the election.
16 (c) An election under this section shall not be held by the same mu-
17 nicipal utility or cooperative utility more often than once every three
19 Sec. 8. The commission may adopt such rules and regulations as rea-
20 sonably necessary to carry out the provisions of sections 2 through 8.
21 Sec. 9. For the purposes of section 1 of article 11 of the constitution
22 of the state of Kansas and article 5a of chapter 79 of the Kansas Statutes
23 Annotated, natural gas public utility property, whether real or personal,
24 tangible or intangible, includes only property subject to regulation and
25 included in natural gas public utility rate bases by the state corporation
27 Sec. 10. This act shall take effect and be in force from and after its
28 publication in the statute book.