By a margin of three to one, Victory members voted to free the company from the state's oversight of rate changes.
Victory Electric members voted nearly three-to-one to remove the cooperative utility from the rate-setting jurisdiction of the Kansas Corporation Commission in a decision tallied this week.
About 74 percent of Victory members — that is, customers — that voted on the issue ultimately agreed with the position of the company and its member-elected board, that deregulation would allow more flexibility in rate structures and reduce the cost of adjustments in front of the KCC.
"We were pleased with how the vote came out and we're still committed to doing what's in the best interest of our members: keeping the rates low, the cost of power low, doing whatever we can do save our members money," Victory spokesperson Jerri Imgarten said.
Roughly 22.7 percent of Victory ratepayers voted on the issue, around 3,100 households and businesses, Imgarten said. Votes were counted by a third party firm.
The vote unifies the two classes of customers that have existed since Victory, in a partnership with four other rural coops, purchased the remnants of the for-profit power company Aquila. Victory's legacy customers approved deregulation in 2000. The new customers, including most of those in Dodge City, have been under KCC oversight.
As such, the company had to operate essentially two separate units for reporting, billing and other business requirements. The vote by all Victory customers, legacy and new — for or against — also unifies the two under the same regulatory umbrella.
Victory is expected to pursue changes to its rate structure in the near future to further unify the two sides of the company. This process could take several months as the company commissions a cost-of-service study and receives approval by the board of trustees.
Under KCC jurisdiction, rate cases can take many months and involve hundreds of thousands of dollars in attorney fees, Victory CEO Shane Laws said, describing the process as including a fair amount of gamesmanship between rate changes proposed and those desired. The decision to pursue the plan was supported unanimously by the 12-member board.
The last rate increase in 2010 for new Victory customers cost the company $215,000 as part of a multi-cooperative case following the purchase of Aquila. That rate increase was a result needing to invest in the fading infrastructure left by the former utility, Laws said.
The 2011 rate change for legacy Victory customers costs $23,000 in comparison, according to the company. Rate cases can cost as much as half a million dollars and take nearly a year to complete, Laws said. The 2011 rate case was the first for the company's legacy customers since 1992.
Opponents of deregulation, including the state-funded consumer advocacy group Citizens Utility Ratepayer Board, or CURB, said deregulation removes a protection for consumers who likely do not have the expertise or time to closely follow the utility's issues.
CURB, through Victory, had sent letters to all of the cooperatives members making a case for its continuing advocacy and the benefits of the KCC. Under state law, cooperative utilities seeking to deregulate are required to also send opposing views.
As Victory will still be required to follow state and federal labor, safety, emissions and other regulations, and has an elected governing body, the cooperative has preferred the term "self-regulation" during the months leading up to the vote.
Though Victory will be removed from authority of the KCC regarding rate changes, consumers will still retain some protections of the agency's oversight if they decide to mobilize against increases.