Senate committee considers limiting discounted economic-development power rates for very large energy users

The Kansas Senate Utilities Committee heard testimony on Senate Bill 81, which would bar public utilities from providing discounted economic development electric rates to certain very large, high-peak electric-demand facilities unless they meet workforce or tariff conditions.

Proponents told the committee the intent is to ensure discounted rates target projects that deliver long-term employment and community benefits rather than very large electricity users that produce relatively few permanent jobs. Supporters said the state should guard existing customers from bearing new grid and transmission costs tied to exceptionally large loads.

Nick Myers, Assistant Reviser, Kansas Revisor of Statutes, summarized current law authorizations for discounted economic development electric rates and described how SB 81 would change eligibility. Myers said current law authorizes varying discounts tied to peak demand thresholds: for example, a facility projected to reach 200 kilowatts within two years can qualify for up to a 20% average discount for five years, and larger thresholds (including a threshold covering 25 megawatts or more) permit longer or larger discounts under current statutes. Myers said SB 81 would prohibit discounted rates for facilities projected to have a peak demand of 40 megawatts or above within two years unless the facility is projected to employ at least 200 full-time workers or is served under a data-center or large-load tariff. "This bill generally would do is it would prohibit the provision of a discounted economic development electric rate for certain very large facilities that operate with a very high peak electric demand," Myers said.

Paul Snyder of Kansas for Lower Electric Rates said the current pool of discounts is finite and should be targeted toward long-term job creators rather than very large, energy-intensive customers with limited local employment. Snyder cited examples of modern data centers that substantially exceed traditional sizes and said the state lacks the available capacity for extremely large projects. "Historically data centers, a good sized data center was 20 to 50 megawatts. Today's data centers are 10 to 20 times bigger than that," Snyder said, adding that granting discounts to very large loads could shift grid expansion and transmission costs to existing customers.

Eric Stafford, Vice President for Government Affairs at the Kansas Chamber, said the Chamber supports limiting discounts to projects that produce jobs and suggested alternative approaches for data centers, including price structures that keep necessary energy available while avoiding blanket discounts to large loads. He noted the policy conversation should balance attracting investment with protecting ratepayers from new system costs.

Committee members asked clarifying questions about the kilowatt/kilovolt phrasing in the current statute summaries and about how infrastructure and transmission costs for very large customers would be recovered. Supporters said large customers often pay to build nearby interconnection infrastructure such as substations and lines but that broader transmission and system upgrades can still produce costs that ripple to other customers; proponents argued SB 81 seeks to prevent those costs from being borne broadly by retail ratepayers.

No formal vote was taken at the hearing. Committee testimony and written materials were left for members and the bill will return for further committee action per the Senates process.