Date: 01-22-2015;
PSC order saves Ky. Power rate payers $54M; says adjusted fuel charges were ‘unreasonable’…
Ky. Power chief responds to decision…
Kentucky Press News Service
The Office of Rate Intervention, along with the Kentucky Industrial Utility Customers (KIUC), announced saving eastern Kentucky ratepayers $54 million in unlawful fuel costs charged by Kentucky Power Co., the result of a successful intervention in a utility case previously before the Kentucky Public Service Commission (PSC).
In an order issued Thursday the PSC deemed the fuel costs unreasonable and directed Kentucky Power to refund ratepayers $13.2 million that it had already collected during the first four months of last year. Additionally, the PSC barred the company from collecting an estimated $41 million in additional fuel costs that was to be collected through the end of May 2015.
Over the 17-month period, the average residential customer will save approximately $155.
“As Attorney General, I am proud to serve as an advocate for Kentucky consumers, and at a time when every dollar saved can make a difference for so many Kentuckians, I’m pleased that we are keeping this money in the pockets of ratepayers in eastern Kentucky,” Attorney General Jack Conway said. “My Office of Rate Intervention and I work hard each day protecting Kentuckians from excessive utility rates.”
Kentucky law allows electric generating utilities to bill ratepayers for the reasonable costs of fuel required to run the generating plants on a monthly basis, and those charges appear each month on a customer’s monthly bill. In Thursday’s order, citing joint testimony from the Office of the Attorney General and KIUC, the PSC ruled that Kentucky Power violated PSC precedent and prior orders in the process it uses to determine fuel charges for ratepayers.
Additionally, in 2013, the PSC authorized Kentucky Power to purchase a 50-percent interest in the Mitchell power plant in West Virginia to replace the Big Sandy No. 2 generating unit in Louisa, Ky. In its order, the Commission criticized Kentucky Power for failing to disclose the impact that its allocation of fuel costs would have on its ratepayers during the period when both the Mitchell plant and the Big Sandy plant remain operational.
“Transparency is critical, and indeed one of the touchstone principles in the regulatory process,” the PSC said. “The failure of Kentucky Power to disclose this information in the Mitchell Case is a matter of great concern to the Commission.”
Attorney General Conway opposed Kentucky Power’s plan to acquire the Mitchell plant as a replacement for the Big Sandy Unit 2 and appealed the PSC’s decision to the Franklin Circuit Court. The appeal is pending.
11:10 am Friday morning…
1/23/2015
Kentucky Power responds to Kentucky PSC fuel case decision; still reviewing decision, Pauley says…
FRANKFORT, Ky. – Kentucky Power President and Chief Operating Officer Greg Pauley issued the following statement in response to Thursday’s order from the Kentucky Public Service Commission.
“We are still reviewing the decision and determining next steps. We are pleased that the Kentucky Commission affirms that our purchase of the Mitchell Plant generation represents the lowest reasonable cost alternative for replacing Big Sandy Unit 2 over the long term. However, we are disappointed by the suggestion that we purposefully did not disclose all cost information associated with that purchase. We have repeatedly demonstrated throughout our long history with the PSC that we are open and transparent in all of our proceedings and have never intentionally misled the commission in our dealings. The increase in fuel costs disallowed by the Kentucky PSC resulted from having both the Mitchell and Big Sandy generating units in operation during the period evaluated. It will no longer be an issue after Big Sandy Unit 2 is retired,” Pauley said.
“Kentucky Power customers actually realized $9.9 million in net cost benefits from having both Big Sandy Unit 2 and the Mitchell unit available to generate electricity during the extreme cold of the polar vortex last winter. Without both generating units, we would not have been able to generate enough electricity to serve our customers and would have been purchasing power from the market when costs were extraordinarily high,” Pauley said.
Kentucky Power, with headquarters in Frankfort, Ky., provides service to approximately 172,000 customers in all or part of 20 eastern Kentucky counties. It is a unit of the AEP system, one of the largest electric utilities in the United States, with more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined.
