No. 96,228
IN THE COURT OF APPEALS OF THE STATE OF KANSAS
KANSAS INDUSTRIAL CONSUMERS GROUP, INC.,
RAYTHEON AIRCRAFT COMPANY, CESSNA AIRCRAFT COMPANY,
BUZZI UNICEM USA, GOODYEAR TIRE & RUBBER COMPANY,
COFFEYVILLE RESOURCES REFINING & MARKETING, LLC,
SPIRIT AEROSYSTEMS, INC., PROTECTIONONE, INC.,
THE BOEING COMPANY, and
THE KANSAS HOSPITAL ASSOCIATION,
Petitioners/Appellants,
v.
THE STATE CORPORATION COMMISSION OF
THE STATE OF KANSAS,
Respondent/Appellee.
SYLLABUS BY THE COURT
1. The court's review of an order of the Kansas Corporation Commission (Commission) is in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-601 et seq. On appeal, the Commission's findings are presumed valid, and its order may only be set aside if it is unlawful, not supported by substantial competent evidence, is without foundation in fact, or is otherwise unreasonable, arbitrary, or capricious. The party challenging the legality of the Commission's order bears the burden of proof pursuant to K.S.A. 77-621(a)(1).
2. Based upon a review of the record of a public utility's rate application before the Commission, we hold: (1) The Commission's order permitting a retail energy cost adjustment was not unreasonable, arbitrary, or capricious and did not exceed the Commission's statutory authority; (2) the Commission's order permitting an environmental cost recovery rider did not exceed the Commission's statutory authority; (3) the Commission's order permitting a transmission delivery charge, under the circumstances of this case, violated K.S.A. 66-117 and K.S.A. 2005 Supp. 66-1237; (4) the Commission's order permitting terminal net salvage depreciation adjusted for inflation was not supported by substantial competent evidence; and (5) the Commission's order permitting assessment of rate case expenses to the ratepayers was not unreasonable, arbitrary, or capricious.
Appeal from Kansas Corporation Commission. Opinion filed July 7, 2006. Affirmed in part, reversed in part, and remanded.
James P. Zakoura and Arthur E. Rhodes, of Smithyman & Zakoura, Chartered, of Overland Park, for appellant Kansas Industrial Consumers Group, Inc.
Scott Ray Ediger, Susan B. Cunningham, and Dana A. Bradbury, of Kansas Corporation Commission, of Topeka, for appellee.
Martin J. Bregman, of Westar Energy, Inc. and Kansas Gas and Electric Company, of Topeka, and Michael Lennen, of Morris, Laing, Evans, Brock & Kennedy, Chartered, of Wichita, for intervenors Westar Energy, Inc. and Kansas Gas and Electric Company.
Sarah J. Loquist, of Hinkle Elkouri Law Firm L.L.C., of Wichita, for intervenor Unified School District No. 259.
Before MALONE, P.J., GREEN and CAPLINGER, JJ.
MALONE, J.: The Kansas Industrial Consumers Group, Inc. (KIC), representing large commercial and industrial consumers of electricity, collectively and individually appeal the order of the Kansas Corporation Commission (Commission) approving a net revenue increase for Westar Energy, Inc. (WEI) and Kansas Gas and Electric Company (KG&E) of approximately $3,000,000. The petitioners challenge various aspects of the Commission's order with respect to calculations of the utilities' rates and rate design.
The Parties
This public utility rate application was filed jointly by WEI and KG&E. Both WEI and KG&E are Kansas corporations. In 1992, WEI's predecessor, The Kansas Power and Light Company (KPL), acquired all the common stock of KG&E. KPL became Western Resources and then WEI. KG&E's operations are concentrated in central and southeastern Kansas, and WEI's operations are concentrated in central and eastern Kansas. Throughout the record, WEI is referred to as Westar North and KG&E as Westar South.
KIC is a corporation whose purpose is to represent, advance, and protect the interests of commercial, industrial, and other large volume users of energy. Throughout the proceeding, KIC represented Cessna Aircraft Company; Raytheon Aircraft Company; Buzzi Unicem USA; Goodyear Tire & Rubber Company; Coffeyville Resources Refining & Marketing, LLC; Spirit AeroSystems, Inc.; ProtectionOne, Inc.; The Boeing Company; and the Kansas Hospital Association. KIC and all the organizations it represented appealed from the final order of the Commission. The Boeing Company, however, has since been dismissed as an appellant.
The Proceedings Below
On May 2, 2005, WEI and KG&E (collectively Westar) filed a joint application with the Commission to change their electric utility rates. Westar requested an increase of its revenue requirement for Westar North in excess of $47,800,000 and an increase of its revenue requirement for Westar South in excess of $36,000,000, based upon test year data for the year ending December 31, 2004.
A number of parties were permitted to intervene in the agency proceeding, including the Citizens' Utility Ratepayer Board (CURB) and Unified School District No. 259 (USD 259). KIC was also permitted to intervene after disclosing the entities it was representing. Other intervenors that participated below, but are not involved in this appeal, included the City of Wichita, the Sierra Club, the Kroger Co., the Kansas Power Pool, and the United States Department of Defense.
After the filing of voluminous prefiled testimony by all the parties, the Commission held evidentiary hearings from October 17 to November 3, 2005. The parties were then permitted to file posthearing briefs setting forth their respective positions on the numerous issues raised during the hearings.
On December 28, 2005, the Commission issued its initial order on Westar's application. The Commission's 127-page order addressed a myriad of issues, resolving some in favor of and many against Westar's rate request. The Commission rejected Westar's request for an aggregated revenue increase of approximately $84,000,000. Instead, the Commission found that Westar North's revenue requirement had increased by $24,207,000, but that Westar South's revenue requirement had decreased by $21,156,550. This resulted in an aggregated revenue requirement increase for Westar of $3,050,494. The Commission estimated the average residential customer's bill in Westar North's service area would increase 5.1%, while the average residential customer's bill in Westar South's service area would decrease 4.8%.
KIC, CURB, and USD 259 filed timely petitions for reconsideration raising numerous issues. The Commission's staff also filed a petition for clarification, and Westar filed a petition for specific reconsideration, for clarification, and for submission of additional evidence. On February 13, 2006, the Commission granted the staff's request for clarification, but it denied all the remaining issues raised by the parties. The order constituted a final agency action.
KIC and its participating organizations (Petitioners) filed a timely petition for judicial review with this court. Westar and USD 259 intervened. Thereafter, USD 259 and CURB filed separate petitions for judicial review.
Standard of Review
Pursuant to K.S.A. 66-118c, this court's review of an order of the Commission is in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq. On appeal, the Commission's findings are presumed valid, and its order may only be set aside if it is unlawful, is not supported by substantial competent evidence, is without foundation in fact, or is otherwise unreasonable, arbitrary, or capricious. Western Resources, Inc. v. Kansas Corporation Comm'n, 30 Kan. App. 2d 348, 351, 42 P.3d 162, rev. denied, 274 Kan. 1119 (2002). The party challenging the legality of the Commission's order bears the burden of proof pursuant to K.S.A. 77-621(a)(1). Citizens' Utility Ratepayer Bd. v. Kansas Corporation Comm'n, 28 Kan. App. 2d 313, 315, 16 P.3d 319 (2000), rev. denied 271 Kan. 1035 (2001).
This court has previously held that a Commission's order is "'lawful' if it is within the statutory authority of the commission, and if the prescribed statutory and procedural rules are followed in making the order. [Citation omitted.]" Farmland Industries, Inc. v. Kansas Corporation Comm'n, 24 Kan. App. 2d 172, 175, 943 P.2d 470, rev. denied 263 Kan. 885 (1997). An order is considered "'reasonable' if it is based on substantial competent evidence. [Citation omitted.]" 24 Kan. App. 2d at 175. The Commission's action is arbitrary and capricious if it is unreasonable or without foundation in fact. Farmland Industries, Inc. v. Kansas Corp. Comm'n, 25 Kan. App. 2d 849, 852, 971 P.2d 1213 (1999).
The Commission is granted broad discretion by the legislature in weighing the competing interests involved in utility rate cases. The court does not have the authority to substitute its judgment for that of the Commission. The court must recognize that the Commission's decisions "involve complex problems of policy, accounting, economics, and other special knowledge." Western Resources, Inc., 30 Kan. App. 2d at 352. The court may reverse or nullify a Commission order only when the decision is "'"so wide of the mark as to be outside the realm of fair debate. [Citations omitted.]"'" Williams Natural Gas Co. v. Kansas Corporation Comm'n, 22 Kan. App. 2d 326, 335, 916 P.2d 52, rev. denied 260 Kan. 1002 (1996).
Retail Energy Cost Adjustment
In their first issue on appeal, Petitioners challenge the Commission's order permitting Westar to include a retail energy cost adjustment (RECA) in its rates. Westar had proposed to include a RECA, which would be calculated based on a fuel adjustment charge less an off-systems sales adjustment. The primary purpose of any type of energy cost adjustment (ECA) clause is to pass through to the consumer any increases or decreases in the cost of energy, while avoiding the costly and time-consuming process of a formal hearing to consider a general revision to all rates.
Petitioners contend the Commission's order altered its 1991 merger order, discussed below, and there was not substantial competent evidence to support the Commission's deviation from that prior order. Petitioners contend no evidence was presented that the effects of the merger had changed to warrant reinstatement of the pass-through provision. Petitioners also contend the Commission failed to explain the basis for its change in position.
In 1991, KPL and KG&E merged into a single entity known as KPL. Their merger was presented to the Commission for approval in KCC Docket Nos. 172,745-U and 172,155-U. In a 110-page order issued November 15, 1991, the Commission approved the merger subject to various conditions. The Commission discussed numerous arguments various parties had made against the proposed merger. However, none of the parties appeared to have raised any concern about the utilities' ECA clauses in their existing rates. The Commission's primary focus in the merger order was the proper method in treating the acquisition premium paid by KPL to KG&E shareholders, whether the benefits of the merger would outweigh merger costs and result in a benefit to ratepayers, and how cost savings should be divided between ratepayers and shareholders.
The first mention of the ECA clauses was raised sua sponte by the Commission in discussing an appropriate tracking system that would verify cost savings achieved by the merger. The Commission rejected the utilities' proposed tracking system and instead ordered that an index mechanism be created based upon normalized premerger test year costs to act as a benchmark for the premerger costs and expenses. In addition, the benchmark would be adjusted annually for inflation and for known changes in tax laws or regulatory rules. This adjusted benchmark would be used to measure against postmerger costs to determine what cost savings, if any, had developed from the merger. In setting the benchmark, the Commission determined the cost measurements would exclude various items including fuel, purchased gas, and purchased power costs.
Later in the order, the Commission stated:
"It should be noted that we have excluded fuel and purchased gas and purchased power costs from the indexing mechanism. This is for two separate reasons and requires elaboration. Purchased gas costs were not projected to be affected by the merger and will continue to be subject to a Purchased Gas Adjustment (PGA) clause in KPL's gas tariffs. Due to the changes occurring in the gas industry, driven in large part by new and proposed Federal Energy Regulatory Commission rules, there is some uncertainty concerning gas prices so that changes in the PGA would not be reasonable at this time.
"However, the Commission has decided to take this opportunity to require the Applicants to eliminate their respective Energy Cost Adjustment (ECA) clauses contained in their tariffs for electric service. In the last several years, the Commission has approved of such ECA elimination for other electric utilities and believes it an appropriate time to do the same for KPL and KGE. These clauses, instituted in the mid-1970s, were designed to allow for monthly adjustments in the fuel and purchased power components of the cost of electricity. Such monthly adjustments were appropriate because of the rapid escalations and fluctuations in the costs of fuel at the time. . . . Since fuel costs are now much more stable and the Commission desires to provide additional incentives to the utilities to manage their costs as efficiently as possible, it has been eliminating the ECAs on a case-by-case basis as the opportunity arose.
"We are therefore directing the Applicants, staff and any other interested party to discuss how the Applicants' respective ECAs should be eliminated. The Commission directs staff to initiate a separately docketed proceeding to consider the elimination of Applicants' energy cost adjustment clauses . . . ." (Emphasis added.)
In its conclusion, the Commission found the merger would serve the public interest and approved the merger subject to various conditions. With respect to a number of the listed conditions, the Commission explicitly stated in each paragraph that "[t]he merger will be approved on the condition that . . .," or some substantially similar language. With respect to the elimination of the ECA clauses, however, the merger order merely stated: "The Commission directs staff to initiate a separately-docketed proceeding to consider the elimination of Applicants' energy cost adjustment clause" and set guidelines for that docket. Finally, the Commission unequivocally reserved the right to modify or revoke the conditions imposed in the merger order:
"It should be noted that many of the conditions set forth above are efforts to achieve a fair and reasonable balance between the Applicants' requirements for a successful merger and the interests of ratepayers in receiving reasonable benefits from the merger. Of most importance, however, is the Commission's continuing duty to ensure that utility rates are just and reasonable. If the various conditions we have set forth above, either singly or in combination with one another, appear to result in unreasonable or unjust rates, the Commission will not hesitate to modify or revoke that condition or otherwise act to ensure that rates are reasonable and that neither Applicants nor ratepayers receive unwarranted benefits or detriments." (Emphasis added.)
Pursuant to the Commission's directive, an independent docket–No. 92,KPLE-228-ECA–was opened in 1992 to evaluate the elimination of KPL/KG&E's ECA clauses. Staff and KPL/KG&E ultimately entered into a stipulation and agreement which stated that "[a]mong the conditions [for the merger] were the elimination of the Energy Cost Adjustment Clauses (ECAs) of KPL and KG&E . . . ." In considering the stipulation and agreement, the Commission indicated that in the prior merger order it had "ordered KPL and KGE to eliminate their ECAs and replace them with a fixed fuel cost." The order further noted that another docket was pending to review whether the ECA clauses contained in Kansas electric utilities' rates should be eliminated. Thereafter, the Commission approved the stipulation and agreement without specifically indicating it was a condition of the merger order.
Returning to the present case, Petitioners contend the Commission's ruling "reinstating" Westar's RECA clause is contrary to the terms of the 1991 merger order. Petitioners assert there was no evidence in the present hearings establishing that the effects of the merger warranted the reinstatement. In response, the Commission asserts the 1991 elimination of the ECA clauses was not a "condition" of the merger. The Commission also contends a change of circumstances, especially the volatility of fuel prices, warrants reinstatement of an ECA clause.
Generally, administrative agencies may change positions on an issue if the new position is supported by substantial competent evidence. However, when an administrative agency deviates from a policy it had adopted earlier, it must explain the basis for the change. Western Resources, Inc., 30 Kan. App. 2d 348, Syl. ¶ 7. Likewise, the process by which an administrative agency reaches its decision must be logical and rational, especially if the agency is deviating from its prior standards. Home Telephone Co. v. Kansas Corporation Comm'n, 31 Kan. App. 2d 1002, 1012, 76 P.3d 1071 (2003), rev. denied 277 Kan. 923 (2004).
The Commission's assertion--that the elimination of the ECA clauses in 1991 was not a condition of the merger–is consistent with the structure and language of the 1991 merger order. Although many parties involved in that docket were opposed to the merger, none appear to have advocated that eliminating the ECA clauses was necessary if the merger was approved. Instead, the elimination was raised sua sponte by the Commission because the proceeding "presented the opportunity" to bring KPL/KG&E into conformance with an overall industry trend of eliminating ECA clauses due to stability in fuel prices. "'[A]n agency's interpretation of the intended effect of its own orders is controlling unless clearly erroneous.'" Southwest Gas Corp. v. FERC, 145 F.3d 365, 370 (D.C. Cir. 1998) (quoting Transcontinental Gas Pipe Line Corp. v. FERC, 922 F.2d 865, 871 [D.C. Cir. 1991]). The Commission's interpretation of its prior merger order is supported by the record and is consistent with the language of that order.
Even if elimination of KPL/KG&E's ECA clauses had been an explicit "condition" of the merger order, the 1991 Commission expressly reserved the right to revoke or modify any of the conditions imposed if they resulted in unreasonable or unfair rates in the future. Contrary to Petitioners' position, modification of the merger conditions did not require proof that circumstances tied to the merger had changed. Instead, the standard for modification was whether the conditions resulted in unfair or unreasonable rates. Cf. Midwest Gas Users Ass'n v. Kansas Corporation Commission, 5 Kan. App. 2d 653, 661, 623 P.2d 924, rev. denied 229 Kan.670 (1981) (presumption of validity of previously approved rate structure simply meant that under the conditions then existing, the structure was "just and reasonable").
In its posthearing brief filed with the Commission, Petitioners vigorously disputed the need for the RECA provision in Westar's rates. On appeal, however, Petitioners do not directly challenge the Commission's finding that current fuel prices had returned to a volatile and fluctuating state that warranted the inclusion of a RECA mechanism in rates. Thus, Petitioners have abandoned any contention that the evidence did not support the economic need for the RECA provision. See Goldbarth v. Kansas State Board of Regents, 269 Kan. 881, 884, 9 P.3d 1251 (2000) (issue not briefed is deemed waived or abandoned). Accordingly, we conclude KIC has failed to meet its burden of establishing the Commission's order with respect to the RECA was unreasonable, arbitrary, or capricious. See Southwestern Bell Tel. Co. v. Kansas Corporation Comm'n, 29 Kan. App. 2d 414, 418, 29 P.3d 424 (2001) (the burden of proving the invalidity of an order of the Commission is on the party asserting the invalidity).
In the alternative, Petitioners contend the Commission exceeded its statutory authority by permitting Westar to include the RECA in its rates. Specifically, Petitioners contend the energy pass-through provisions constitute a rate change without a full rate hearing as required by K.S.A. 66-117. In response, the Commission relies on its broad statutory authority under K.S.A. 66-101 and K.S.A. 66-101g to support its action. In K.S.A. 66-101, the Commission is "given full power, authority and jurisdiction to supervise and control the electric public utilities . . . and is empowered to do all things necessary and convenient for the exercise of such power, authority and jurisdiction." In K.S.A. 66-101g, the legislature stated that with respect to the regulation of electric public utilities: "[T]he provisions of this act and all grants of power, authority and jurisdiction herein made to the commission, shall be liberally construed, and all incidental powers necessary to carry into effect the provisions of this act are expressly granted to and conferred upon the commission."
Generally, administrative agencies such as the Commission, as creatures of statute, may only act within the scope of authority granted by their authorizing statutes. Legislative Coordinating Council v. Stanley, 264 Kan. 690, 706, 957 P.2d 379 (1998). Whether an agency has exceeded its statutory authority requires interpretation of the statutes establishing the agency. This presents a question of law subject to unlimited review by an appellate court. In re Tax Appeal of Trickett, 27 Kan. App. 2d 651, 656-57, 8 P.3d 18 (2000).
The procedure to implement a public utility rate change is generally set forth at K.S.A. 66-117, which provides in part:
"(a) Unless the state corporation commission otherwise orders, no common carrier or public utility over which the commission has control shall make effective any changed rate, joint rate, toll, charge or classification or schedule of charges, or any rule or regulation or practice pertaining to the service or rates of such public utility or common carrier except by filing the same with the commission at least 30 days prior to the proposed effective date. The commission, for good cause, may allow such changed rate, joint rate, toll, charge or classification or schedule of charges, or rule or regulation or practice pertaining to the service or rates of any such public utility or common carrier to become effective on less than 30 days' notice." (Emphasis added.)
Contrary to Petitioners' assertion, K.S.A. 66-117 does not require, on its face, every change in rates to be approved in a full-blown rate hearing. The statute begins: "Unless the state corporation commission otherwise orders." In allowing the RECA provision in this case, the Commission established a regulatory framework to review Westar's monthly RECA prices and the annual cost adjustment (ACA) factor. The ACA factor adjusts the past monthly projected RECA costs with the actual costs incurred during the prior year. The ACA analysis includes a review of performance of plants, Westar's purchasing practices, and fuel procurement practices. This analysis provides an incentive to Westar to operate efficiently.
Furthermore, the Commission has been authorizing both natural gas and electric utilities to use ECA or purchased gas adjustment (PGA) clauses for a many years. These provisions have been addressed in a number of appellate cases. See, e.g., Farmland Industries, Inc. v. Kansas Corporation Comm'n, 29 Kan. App. 2d 1031, 1044, 37 P.3d 640 (2001), rev. denied, 274 Kan. 1111 (2002) (when natural gas wholesaler receives a refund from upstream producers or pipelines, PGA clauses require those refunds to be passed on to current customers); Greeley Gas Co. v. Kansas Corporation Commission, 15 Kan. App. 2d 285, 288-89, 807 P.2d 167 (1991) (Commission violated filed rate doctrine by imposing the PGA 80/20 incentive tariff, allowing utility to only pass through 80% of any increase in its gas costs and, likewise, only 80% of any decrease in gas costs); Kansas Gas & Electric Co. v. Kansas Corp. Comm'n, 14 Kan. App. 2d 527, 536-37, 794 P.2d 1165, rev. denied 247 Kan. 704 (1990) (Commission must comport with ECA clause when calculating customer refunds; failure to do so results in retroactive ratemaking); Midwest Gas Users Ass'n, 5 Kan. App. 2d at 654 (increased cost of gas to utility was not involved in rate increase because it is automatically passed through to consumers by means of a PGA).
Despite the Commission's long-established use of ECA clauses, no party in these cases has ever challenged the Commission's statutory authority to include such provisions in utility rates. "'When the legislature fails to modify a statute to avoid a standing judicial construction of that statute, the legislature is presumed to agree with the court's interpretation.' [Citation omitted.]" Halsey v. Farm Bureau Mut. Ins. Co., 275 Kan. 129, 136, 61 P.3d 691 (2003). A similar principle arises in connection with the doctrine of operative construction. Many courts have acknowledged that a longstanding administrative interpretation of a statute should not be overruled except for weighty reasons. See In re Tax Appeal of Federal Deposit Ins. Corp., 249 Kan. 752, 764, 822 P.2d 627 (1991); see also SEC v. Zandford, 535 U.S. 813, 819-20, 153 L. Ed. 2d 1, 122 S. Ct. 1899 (2002) (consistent interpretation of § 10[b] of the Securities Exchange Act and SEC Rule 10b-5 by SEC in formal adjudication is entitled to deference if reasonable); Aulston v. United States, 915 F.2d 584, 596 (10th Cir. 1990), cert. denied 500 U.S. 916 (1991) (adopting the Department of Interior Board of Land Appeals' longstanding interpretation of federal laws pertaining to federal land patents).
We conclude the Commission's interpretation of its statutory authority with respect to permitting ECA clauses is consistent with the plain language of the authorizing statutes. Moreover, the use of ECA clauses is a longstanding agency practice that neither the courts nor the legislature have seen fit to question, limit, or abrogate.
Additionally, Petitioners challenge the RECA provision allowed in Westar's rates on the ground it failed to conform to standardized ECA provisions the Commission created in 1977. K.S.A. 66-118b provides that a party seeking review of a Commission order must petition for reconsideration of that order as set forth in K.S.A. 2005 Supp. 77-529. A party may not rely upon any ground in a court proceeding that was not included in the petition for reconsideration. Any issue not set forth in the petition for reconsideration cannot be relied upon in judicial review proceedings. Kansas Industrial Consumers v. Kansas Corporation Comm'n, 30 Kan. App. 2d 332, 338, 42 P.3d 110 (2002).
In this case, Petitioners did not raise the issue of the Commission's lack of compliance with the 1977 order in Petitioners' posthearing briefs or their petition for reconsideration. Petitioners do not justify their failure to previously raise this issue below or explain why this court should address the issue for the first time on appeal. Accordingly, Petitioners have failed to properly preserve this issue.
Environmental Cost Recovery Rider
Next, Petitioners take issue with the Commission's order permitting Westar to include an environmental cost recovery rider (ECRR) in its rates. In its prefiled testimony, Westar estimated its total capital expenditures over the next 10 years for environmental compliance upgrades would exceed $453 million. In its rate application, Westar sought permission to include an ECRR to recover its costs. Westar's proposal would allow the utility to collect from customers a monthly surcharge to recover capital costs, construction work in progress (CWIP) costs, and operating and maintenance expenses associated with installing new pollution control equipment. The ECRR would be calculated yearly based on the prior calendar year's year-end costs. Using an ECRR, Westar could recover the revenue requirement associated with these expenses through a surcharge until the next rate case. In the next rate case, those costs would then be included in base rates.
In its order, the Commission found the ECRR was a reasonable mechanism for "funding the extraordinary costs mandated" by federal environmental laws. The Commission approved a modified version of Westar's request which excluded operating and maintenance expenses from the ECRR and added oversight by the Commission's staff to ensure the investments in environmental upgrades were prudent. The approved program requires Westar to file a summary of each capital project at least 6 months before work is commenced. Thereafter, a true-up mechanism would be used to ensure only costs actually expended would be collected. The Commission concluded that prompt recovery of ECRR costs would result in lower retail cost of service for ratepayers, and approved the provision as modified.
Similar to one of the objections Petitioners raised with respect to the RECA pass-through provision, Petitioners contend the Commission exceeded its statutory authority by permitting Westar to include the ECRR in its rates. Petitioners assert the Commission's statutory authority to permit surcharges is limited to K.S.A. 66-117(f) (surcharges for ad valorem taxes), K.S.A. 66-1233 (expenses related to protective security measures), and K.S.A. 2005 Supp. 66-1237 (transmission-related charges). Petitioners contend that, under the doctrine of expressio unius est exclusio alterius, i.e., the inclusion of one thing implies the exclusion of another, the legislature's action in permitting surcharges for specific types of expenses infers an intent not to permit surcharges for expenses not specifically authorized by statute. In response, the Commission contends the expressio unius doctrine does not apply because of the broad generic powers the legislature granted it in K.S.A. 66-101 and K.S.A. 66-101g. It also asserts the statutes tha