Preserving a high quality of life and protecting local businesses are top priorities for Spring Hill’s leaders. Many residents have expressed concern over the last several weeks regarding a 12.5 percent rate increase proposed by Kansas City Power & Light, which provides electric service for about half of Spring Hill's residents. Local leaders, too, are concerned about the effect this rate increase could have on our residents and businesses.
Spring Hill Mayor Steven Ellis spoke on behalf of local homeowners and businesses during a public hearing of the Kansas Corporation Commission on May 18 in Overland Park. The KCC is responsible for regulating the state's public utilities, and the proposed rate change cannot go into effect without this body's approval.
The rate increase will be a burden on local homeowners, especially those with all-electric homes, Mayor Ellis told the Commission. He also cited statistics showing the toll such a rate increase could take on local businesses and on City revenue and expenses.
A written copy of his remarks follows.
"Good evening, and thank you for the opportunity to provide comment at tonight’s public hearing. My name is Steve Ellis, and I serve as Mayor of the city of Spring Hill, Kansas. Spring Hill is a community of approximately 5,700 residents and is situated in southeast Johnson County with parts in northeast Miami County. Spring Hill’s electrical needs are served by both KCP&L and Westar.
The impact of a proposed 12.5 percent increase on the residents of Spring Hill is significant. Approximately 81 percent of KCP&L-serviced homes and businesses in Spring Hill are all-electric. When this body did away with the all-electric credit that KCP&L previously provided to customers, residents of my community experienced dramatic increases in their electric utility bills.
With a proposed 12.5 percent increase in now, KCP&L is asking customers to dig even deeper into pockets that have already been strained by a slow economic recovery resulting in little increase in wages. In Spring Hill alone, consumers in Miami County were hit with a three-mill increase in property taxes by the Miami County government, and all residents of Spring Hill saw an increase of one mill from the Spring Hill Recreation Commission. For its part, the City of Spring Hill reduced property taxes by one mill for 2015 due to a mix of rising property values and increased belt-tightening.
This brings us to the broader economic impact of KCP&L’s rate increase request. KCP&L indicated in its mailer to consumers that the average increase for summer users would be approximately $11.67 per month, with higher increases felt by all-electric consumers during winter months due to the loss of the all-electric credit.
Using KCP&L-provided data for average electric bills for all-electric consumers, this would result in an average increase of approximately $27 per month. In Spring Hill, this means that 865 homeowners out of approximately 1,067 served by KCP&L will experience this significantly higher increase.
In its May 2014 survey of wages for all occupations across Kansas, the Bureau of Labor Statistics reported median income for Kansas residents at $15.73 an hour, meaning that on average, all-electric consumers will lose almost two hours of pay monthly to accommodate this rate increase. This is money that consumers could use for other economic activity at local businesses such as food and goods, as well as entertainment.
The impact to our local businesses extends to our city as well. If consumers are not spending, then we are not collecting sales tax.
The impact extends beyond individual homeowners and businesses served by KCP&L. The estimated increase in the City’s street light program just for KCP&L-serviced lights is approximately $11,000, about one-fifth of one mill. This increase is paid by all Spring Hill taxpayers, regardless of whether they are KCP&L customers or not.
This increase, coupled with the loss of the all-electric credit, has placed owners of all-electric homes at a disadvantage to those selling homes with both gas and electric. Eight subdivisions in Spring Hill are all-electric, and of those, only three are fully built-out/completed subdivisions. Speaking anecdotally, it is not hard to see how a prospective buyer would choose to spend more on their home than they would choose to spend on their utilities. As the fifth-fastest-growing community in the region, developers and sellers have been placed at a disadvantage not of their own making when competing against subdivisions that offer gas and electric service.
Looking at just all-electric homes, this increase will pull nearly $300,000 out of Spring Hill and place it in the hands of KCP&L. Through all of this, however, shareholders of Great Plains Energy, Inc., the parent company of KCP&L, have enjoyed stock dividends regularly since 2010 and a nearly 35 percent increase in share price during that same timeframe.
This is not to suggest that investors should not be rewarded for the risks they undertake, nor to suggest that KCP&L itself should not be able to recoup certain costs. However, neither of these things should be happening on the backs of consumers who have no choice but to accept the rate increase and cut costs elsewhere.
One has to question the providence of stripping KCP&L of its ability to offer all-electric credits to its best customers and whether further burdening all-electric customers with an additional increase is in the best long-term interests of Kansas at a time when we are all working hard to turn a weak economic recovery into something more sustainable.
We understand that increases in expenses are to be expected, but with the Society of Human Resources Management reporting that wage increases are expected to hold steady at 3 percent for 2015, we must find a way to better protect the consumer who is captive to a single utility provider.
On behalf of the 5,700 citizens that I have the privilege to represent, thank you for your time and consideration."