ONEGAS fights passing along federal tax cuts to Kansas consumers

While tens of thousands of customers of one Kansas natural gas service will see a drop in their utility bills over the federal tax reductions approved a year ago, the Oklahoma parent company of another service is fighting such a move.

The 37,000 customers of Black Hills Energy in Wichita, Kansas will see about a $7.30 reduction in their January gas bill and about a dollar a month thereafter, according to a report in the Wichita Eagle. Black Hills is passing through an estimated $1.7 million in annual savings to its customers.

Not so for the Kansas Gas Service, the utility owned and operated by Tulsa-based ONEGAS, a firm that has more than 630,000 customers in Kansas and wants to keep the tax cut for its bottom line, despite an order issued last year by the Kansas Corporation Commission to pass the tax savings on to customers.

ONEGAS wants to keep the proceeds rather than do what other utilities are doing, not only in Kansas but in Oklahoma.

The company claims that because of other business costs, it is earning less than the KCC allows, and thus should be exempt from the commission order to pass through the tax cut, reported the newspaper.

“Kansas Gas Service demonstrated, beyond dispute, it was earning below its authorized return even after accounting for the tax savings,” the company said in a brief filed Jan. 3.

Kansas Gas originally filed for a $45.6 million a year rate hike, but recently approved settling with its opponents on a $21.5 million increase.

Keeping the tax cut would add an additional $14 million to the company’s bottom line, according to state records.

“In the settlement agreement, the parties agreed that Kansas Gas Service could take advantage of the provision in the Kansas Corporation Commission’s tax order allowing a utility to demonstrate through its filing that other costs of service have more than offset the decrease in the company’s income tax expenses,” company spokeswoman Dawn Tripp said in an e-mail response to Eagle questions. “Kansas Gas Service provided this supporting data in the company’s rate case.”

A consumer group called CURB is arguing customers should get the savings because taxes are an add-on cost that is supposed to be passed through to customers whether they go up or down.

A spokesman for Citizens Utility Rate Board (CURB) said the agency is taking the position: “You give that dang money back. This is a windfall to (Kansas Gas) otherwise.”

The rate case has to be resolved by the commission by Feb. 25.