KANSAS CITY, Kan. — The Board of Public Utilities general manager, William “Bill” Johnson, finally shared his perspective on the PILOT fee saga that left BPU customers upset after the promise to remove the fee from bills on Oct. 1 was not met.
Up until this point, the first BPU board member to comment on this issue beyond email statements from the utility spoke with KSHB on Oct. 17.
Johnson sat down with KSHB 41’s Rachel Henderson on Tuesday, Oct.29, but did not want to be on camera because of a medical condition he’s recovering from.
A Q&A with KSHB 41’s Rachel Henderson and Kansas City Board of Public Utilities General Manager Bill Johnson is below:
Rachel: Can you walk me through how long the idea at least a fee removal or separating bills has been a topic? Because I know it kind of started even before the PILOT conversation came up.
Johnson: Early last year, I can’t remember exactly what month it started, but there were a lot of customers that we serve that are unhappy with the fact that you have BPU and the Unified Government charges on one bill, which basically forced them to have to pay for all these services at once, and what they were asking for is some form of separation and some time between [when] they have to pay the BPU bill and to pay the Unified Government bill, so it’ll at least provide some relief so they don’t have to have such a heavy lift in meeting this.
If they don’t pay the Unified Government charges, then they’re subject to disconnection of BPU services because they have to pay the entire bill. So with that, and after going through that, and our board and our staff have dealt with a number of customer issues for quite some time, the board decided that they wanted to start a conversation about separating the bill last year. I went to the county administrator, I went to the mayor, started a conversation mid-year around June or July, somewhere around that timeframe.
And October of last year, I think we had gotten to an agreement on how we’re going to proceed with doing that. We worked through that through the first quarter, and then we got to a place to where we couldn’t move forward. We just became kind of stalled at where we were at that time, I think late February if I remember right. They wanted to go back and take a look at how they can separate and put in a billing system, which has been publicly announced.
Our offer to them was to use ours so that they would save them the money — they didn’t have to necessarily spend money on a billing system and show creative ways we can split and utilize this that would save our rate payers money. They chose to continue the conversations they did, and they came to the conclusion they couldn’t afford it.
Rachel: Why is it combined right now? Was that a money-saving tactic?
Johnson: It’s combined. Basically, I don’t know if you’ve seen the charter ordinance or not or if you have access to it, but in that, the services are combined on the bill based on the language of the charter ordinance.
And then also, everything else that appears on the bill, in terms of all their billing, they get to set the rates for the PILOT, they get to set their rates, we just load our system with the new rates and then have our bill print company print it and deliver it to our customers.
Rachel: Where were you when this announcement was made on Aug. 1 at that UG budget proposal meeting?
Johnson: I was nowhere close to the UG. I was monitoring, watching the presentation through YouTube, I guess like others. But I was not at the UG chambers.
Rachel: When you heard that news, you were away. What was your reaction?
Johnson: My reaction was, it’s really not feasible. It was just more complicated than that. I don’t think the Unified Government really understood what it would take to accomplish that, and I don’t know if they really understood what additional burdens that would put on the BPU and the rate payers too.
I think there were — and I’m just repeating what I’ve heard from customers — I think their expectation was that the PILOT was going to be removed and they don’t have to pay it, but that’s not reality.
What I’ve tried to communicate is BPU does not recover enough money through our rates to be able to pay the Unified Government out of our rates, and we don’t have enough money in our reserves to accommodate that type of request without putting this utility in financial jeopardy. The other thing is, if we were forced to do that, then our rates would become the highest rates in the region, and that’s not good for anybody.
We work hard to try to keep our costs in line with others, lower whenever possible, and it serves no purpose for us to have the highest rates in the region.
Rachel: So from your understanding, that conversation that you all had started back in 2023 had just taken a pause? Were you surprised?
Johnson: This conversation didn’t happen in ’23, it was only the separation of the bill, and then the separation of the bill led apparently to this conversation. There was a lot of conversation about the PILOT that took place at the Unified Government that I wasn’t aware of.
Rachel: So what prompted you to send that letter? Was that the first correspondence that you had?
Johnson: It was, based on the update, based on the budget meeting that the Unified Government had when the October 1 date was announced during that budget meeting.
Rachel: But before that, had you had any conversations with either the mayor or county administrator saying that this wouldn’t work, or was that the first actual time that you reached out about that?
Johnson: I don’t remember having any conversation with the county administrator prior to that. If I did, I can’t remember right now. The mayor did announce that he had found a solution for getting the PILOT off the bill during a Wyandotte County Economic Council meeting, and I had a brief conversation with him after that saying, ‘Here are all of the concerns I have if we were to move forward with that.’
Rachel: When you sent this letter and you got a response from them, had you all met after? Or what did those next steps look like?
Johnson: I’ve only met once with the county administrator after these letters were sent out. I think he was away on vacation from my understanding, and it wasn’t until he got back in town and I got an invite from his administrative assistant. I did go over to talk to him.
I sat down, explained not only my concerns but the concerns of the BPU staff as well, and the board. And it appeared that he got it, it appeared that he certainly understands now the challenges of just us pulling it off the bill.
He certainly appears to understand the challenge of us just putting that in our rates because, you know, there’s a lot that comes with it.
If it’s in our rates, there’s a whole process, first to get it there. OK, we have to redesign a lot. That takes several months to re-engineer everything through our systems, and then on top of that, once you accomplish all that, if the PILOT does change, it will take a rate hearing that we’ll have to go through in order to change the rates again to accommodate the PILOT request that the Unified Government would have at that time.
If they want to lower the rate or raise it, it would have to go to a rate hearing because we’re required to do that as a public utility, and that costs a lot of money and a lot of time on top of that too.
Rachel: So when was this conversation you had with the county administrator when he got back from vacation? What month?
Johnson: It was early this month. The first week of October, I believe.
Rachel: So it was after that October 1 deadline they had originally talked about?
Johnson: Yeah, it was after the October 1 date had passed.
Rachel: So when you were looking at that, and you knew ahead of time that this wasn’t going to work too, had you had the chance to have conversations with other board members too?
Johnson: Yes.
Rachel: What were those like? What kind of things did you all discuss?
Johnson: Well, we went into an executive session, I can’t reveal a lot that was discussed there, but I will just say the board is entirely against pulling it off the bill as a line item, collecting it separately from our base charges or any of our other riders, and burying it in our rates.
They know what the consequences are with that, and our position just like many other utilities, whether it’s investor-owned utilities or municipal utilities, they have a separate line item on their bill that shows that they are collecting an additional franchise fee or a PILOT that’s being charged against that utility so that the customers know where that money is going.
Even some cities that have municipal utilities want to be transparent and let their citizens know what’s being collected and how that money’s being used.
Rachel: Did you ever come to understand how the county administrator got to the conclusion that he did that the BPU or UG was collecting improperly? Did he explain that thought process?
Johnson: I had no conversation with the county administrator prior to his October 1 announcement over the PILOT.
Rachel: Even when you all talked after, did he say, ‘When I read the charter, this is what I got from it?’ Were you able to clarify?
Johnson: No, that wasn’t a conversation that we had when we met this month. I understood and understand how he could arrive to that conclusion, but I can also understand how BPU has conducted business, and the Unified Government has been okay with that throughout the existence of the Unified Government. So, this has never been an issue until now.
Rachel: So can you explain, because I know when I talked with [County Administrator], he talked about gross operative revenue, can you explain maybe what’s incorrect about that specific conclusion? Or what makes it okay for you all to collect the way that you do?
Johnson: Again, we do it for transparency purposes. The money is not to support any BPU operations, it’s simply a pass-through. That decision was made years and years and years ago. Okay, and I’ve just continued to follow that process without questioning it myself.
It’s only been brought to my attention now, and not just making me aware of it, but it’s playing out in the public theater, you know, which has never happened that I can remember.
Rachel: When you think about the rider or the pass-through account too, can you explain what a rider is or how it works for people who don’t know?
Johnson: We have riders that are on the bill, too. So, BPU is under a lot of regulation: the EPA, KDHE. Just because we operate as an electric and water utility puts a lot of regulation, a lot of requirements on us in order to protect the environment.
We’re subject to being fully compliant with those requirements, and years ago, EPA passed rules to where we had to invest around $250 million on our Nearman power plant. Those requirements kind of forced us to shut down our Quindaro power station.
But, we did try to maintain the Nearman for price control and for reliability to power our community. So, we made that investment. That was the largest investment that BPU has ever made in its history on any type of single asset.
Well, to pay for that, and to pay for any environmental mandates that’s gonna come down, we established an environmental rider to go on our bills so we can go out, acquire the revenue to pay for those upgrades then and in the future, and then we repay that back through a rider that is collected from the rate payers.
There, we’ve been transparent too to say, ‘this rider is here because we’re being mandated by the federal government to collect funds to be able to make these upgrades.’
The other rider on the bill is, we’re a member of the Southwest Power Pool, so all of our generation, just like Evergy, just like everybody else, our power is sold to the market, and then we turn around and purchase our power back from the market.
So what that does is guarantees all members, all member utilities and communities the lowest prices possible because Southwest is managing a fleet of power stations across the Midwest.
And they also, they first operate the most efficient, lowest cost, and then, until they get a place where they got to put on more higher price, which means we’re getting the best possible prices back for our community.
Well, because the market is volatile, and because we’re participating in that, we do have a rider to capture and let that pass through, and those prices are subject to whatever the market prices are.
Rachel: Okay. Can you explain what directives you can take from the UG or maybe decide to do on your own? Because I think when it comes to the PILOT fee, a question was, why is you can say, ‘We’re not going to do that,’ even if it’s in their charter ordinance to remove it?
Johnson: I’ve never said I’m not going to do that, and if you heard that, then that never came from me.
Rachel: I think just the inaction of not removing the PILOT fee from the bill, you say that’s not feasible.
Johnson: If you read the letter, you saw that I had made requests. I had made requests for meetings. I made requests for meetings many times prior to that, okay. We haven’t had any meetings. Tomorrow night is a meeting between both elected bodies. I’m waiting to see what comes out of that meeting.
My job is to try to, and the charter empowers me to operate the utility on a day-to-day basis. It grants me that right. And I do the best, and it also grants the board the right to oversee the utility on a day-to-day basis from a governance perspective.
So we take our jobs seriously. We’re certainly sensitive to the needs of this community and want to make sure that our services that we provide are the best possible services we can provide.
Because the charter does separate powers like that, it also identifies us as an administrative agency, and with that comes control from the Unified Government.
But you know, I think the concern here and the conversation that needs to be is what I said earlier: when it comes to the PILOT, what’s wrong with how the PILOT is being administered today when the majority of all the other utilities I know are doing the same thing?
And we all speak about transparency, but if it’s buried in our rates, then we’re moving ourselves farther from that. And why would we want to handicap this utility in a way to where we cannot sustain the fiscal responsibility like we should? Those conversations still need to take place.
Rachel: Do you think the BPU has been vocal enough with the public about how feasible all of this is?
Johnson: There’s a line that you don’t want to cross. Yes, we’ve been open, our board has been open about the concerns that BPU faces regarding this topic.
But, we also understand that often times, we have to answer to the unified government too, and in order for us to make good on the promise that we’re going to deliver quality service, then we need to figure out ways how to solve these problems.
That’s what our board has asked for, is an opportunity to sit down and solve problems, and that’s where I am as well.
You know, I told you earlier, I’ve been here for 44 years. I worked at BPU through a lot of different administrations, different mayors. When I came to BPU, the county and the city were split governments. So I was there during the unification, and all the way to today.
There’s been several mayors, three county administrators. You know, there’s been issues that come up, but BPU and the Unified Government have been able to resolve those issues, and I’m hoping that we can resolve this one.
Rachel: Do you think that those issues come from the way that things are outlined in the charter or the structure of how these agencies operate?
Johnson: Well, there’s opportunity to clarify things better in the charter. The charter’s been changed before, I’m sure the charter will be changed in the future. So, if there’s something unclear, and if there is confusion by the charter, then that’s an opportunity for the elected officials to sit down and talk and revisit that and see if they can simplify it.
Rachel: Did you maybe not feel comfortable speaking about this until the October 1 deadline had passed? By this, I mean the PILOT. Because I know we reached out to BPU, and we got a statement about you all having conversations with the Unified Government, but is it right for the public to have wanted to hear from BPU earlier publicly?
Johnson: The PILOT discussion between BPU and UG was not a constant conversation that was taking place. The separation of the bill was a constant conversation that was taking place.
So, I don’t know, and I can’t point to the exact time the UG decided to take a look at the charter and to want to dive into what the meaning of the charter was, the language in regards to the charter. I don’t have that timeline.
Right before the budget meeting, I know that there was some conversation about the PILOT. There were questions asked about how is the PILOT administered because they do have a new CFO over there too, so she had questions that we answered.
But I had no notice prior to the budget meeting that there was going to be a request or a call for us to remove the PILOT by October 1. That was my first time understanding that or hearing that.
Rachel: So I know you sent this letter that you brought on September 13, why not send that August 2?
Johnson: This letter came…after the county administrator speaking to the commission during that meeting. I don’t remember the time between his meeting and this letter.
Rachel: Yeah, he made the original announcement on August 1, that’s why I asked that question.
Johnson: Okay, and I can’t answer that. I don’t want to speculate why that time gap is there.
Rachel: Sure. Just wanted to ask because they could have known earlier, but I understand. So can you talk about too, the fact that you’re retiring. How do you think BPU will be? In good hands? How do you avoid problems like this for the future?
Johnson: I will have very little to do with BPU’s future after I retire. But I have full faith and confidence that the board will find a good general manger to take on after me, so I have no doubts there.
I think BPU’s still a good utility. It’s been a good utility, I think it will be. I think there’s challenges out into the future since the world’s changing, but you know, in my years as being general manager and the years prior to that, BPU’s gone though many changes here too. So, I have all the confidence in the world that we’ll still be here and operating well.
Rachel: Do you have any goals that you want to accomplish before you leave? This PILOT issue, do you want that resolved before you get out of here?
Johnson: Yes I would. I would like it to be resolved with full understanding that there’s nothing wrong with how BPU’s currently collecting the PILOT. There’s nothing wrong with that.
Rachel: If you had to address customers, I know that you have conversations with customers, but do you see any need for an apology from BPU on behalf of the customers?
Johnson: I would have to think about what we could have done better, differently. You know, an apology, I guess if there was an apology, it would have been in the form that we didn’t get information out quicker.
But, you know, understanding that the Unified Government is going through some fiscal changes themselves, and they’re trying to come up with ways of managing their costs and hearing that the PILOT conversation is going to be part of that, and I do give them credit for reducing the PILOT 1% for the residential customers, taking that step, and I hope they’ll continue to move forward with further reductions.
I think it’s wise that BPU does not get in the way of the Unified Government completing its budget process. Regardless as to what’s coming out of that. If they are moving in a direction that I approve, and we all know utility rates are not easy for people to have to pay.
The taxes in this community are not easy for people to pay. If we can make progress on managing our costs, I certainly don’t want to influence that in a negative way with comments and stuff that’s going to cause more problems for them to actually achieve their goals.
We’re in the budget process now, and I’m setting goals myself for this utility to manage our costs and to provide the community with the lowest budget possible. So, I’m right in the midst of that right now.
Rachel: So, I want to ask a clarifying question too. I’m a little bit confused. The UG’s able to reduce that PILOT rate?
Johnson: Yes.
Rachel: So, how are they able to do that, but the PILOT fee can’t be removed? I don’t understand the difference between them able to take action on that, but they can’t do that for the PILOT fee?
Johnson: They take action on that because they set the rate, they tell us what the rate is. And if they reduce it, by them reducing it from 11.9 to 10.9 for a subset of our customers, then that required a charter change right there because the charter prevented them from being able to reduce that.
Before that, the only way they could reduce it was to reduce it for all rate payers, so they decided to adjust the PILOT to allow them to reduce it for the residential customers.
They can do that, they can actually force us to remove it from the bill. Our concern is, what does that mean for this community and for the utility, and that’s the conversation we’ve been trying to have.
Rachel: Is there any penalty or repercussion for you all refusing to do that?
Johnson: No. There’s not, no.
Rachel: So it’s just a matter of having that conversation and trying to stick to the ordinance?
Johnson: We should all be wanting to do what’s best for the community, right? I don’t know where you live, but if you’re a citizen of Wyandotte County, I would think that you would want to know where your dollars are going to support this community, to support this government, and to support this utility.
We break down all of our costs, we go to a great length of explaining a lot of what we do on an ongoing basis. Our board meetings are open just like the commission meetings are open. We hear from the public.
I don’t hide from the truth, whether we have good news to report, or not so good news to report. I think the public is entitled to understand and know that, and I’m fine with that.
Rachel: Is bill separation possible in the future, do you think, or even any other further reduction?
Johnson: At this time, you’d have to ask the Unified Government. Their position is they don’t want to separate. I can’t move forward with separating it without them supporting that.
My hope is if it does not separate totally, that we can get somehow creative on how to provide relief for the community that it’s asking for. Some type of separate billing cycle for BPU charges versus the Unified Government charges.
So maybe set them on a separate payment schedule, payment cycle, then the utility. I don’t know. That would take quite a bit of reprogramming, a lot of planning, in order to achieve that as well.
And then that would also cause them to have to adjust when and how their revenues come in and make sure that they can manage their government operations through that.
Rachel: When you think about this whole PILOT fee saga, what do you wish would have happened instead? What do think could have avoided us being here?
Johnson: Communication could have avoided it. Coming to a meeting without set agendas, coming to a meeting with an open mind. Being able to compromise, things along those lines. That’s what could have avoided it.
Rachel: What do you wish happened differently?
Johnson: I think you saw here that there have been repeated requests to get back together. As long as the government has been unified, there’s been a series of quarterly meetings that’s taken place between the BPU and the Unified Government.
Under the current administration — and that’s four times a year — we’ve only met once under the current administration. Those meetings are valuable in the sense to where it gives us an opportunity to talk about things that impact both sides of Minnesota Avenue.
It’s certainly kept at a high level, they’ve been positive and constructive, we can certainly put forth a lot of conversation with the hope of us accomplishing certain goals along the way. The entire commission and the entire board haven’t met as frequently as that, but we have had quarterly meetings that involved the mayor, county administrator, legal counsel and the staff to support whatever the agenda is for that meeting.
The board president, the board vice president, general manager, and the BPU staff to help support whatever conversations that needed to take place based on that agenda. Those were meetings that took place every quarter.
Rachel: You think something like [Wednesday’s] meeting is a good start?
Johnson: Yes. It will be a good start, but those quarterly meetings would also be a good start, and we need to get back to that.
Rachel: Anything you want to add or think is important for people to know?
Johnson: The thing I would add is just don’t lose sight of the fact that BPU’s here to support our community. That we hear the concerns, we feel the concerns, we all live here, work here, we’re not insensitive to where some of our citizens are, we try to extend support where needed. But BPU by itself can’t solve all of this community’s problems, but we can assist in some way, and we try to be there to help in the ways we do.
Wednesday’s joint meeting between the UG and the BPU was the first of its kind since this news broke. We’ll have future coverage on this meeting, so stay tuned. All UG commissioners and BPU board members — including Johnson — were in person Wednesday.
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