Daily Independent (Ashland, KY)

Editorials

July 2, 2013

No plus side

KPC seeks to close Big Sandy unit and send rates soaring

ASHLAND — When Kentucky Power Co. announced in late December of 2012 that is was planning to shut down one of its two generators at the Big Sandy Power Plant near Louisa and purchase 50 percent interest in the Mitchell Generating Plant in Moundsville, W.Va., we knew immediately that the downsizing or closing of the Big Sandy plant would be devastating to the economy of not only Louisa and Lawrence County.

Not only  would the good paying and stable jobs at the power plant be eliminated, but also the jobs of the hundreds of coal miners who mine the coal to power the plant and the many truck drivers who transport coal from the mines to the power plant.

Any which way one looked at it, the pending closing of even one unit at the plant was horrible news for this region’s economy. But there was at least a tiny ray of good news in December’s announcement  by Kentucky Power officials. By not spending nearly a billion dollars to upgrade the plant in Lawrence County and purchasing half-interest in the West Virginia plant, Kentucky Power said it was saving so much money it was abandoning its request for a whopping 31 percent increase in its electric rates.

Instead of a 31 percent rate hike, Kentucky Power said it was reducing its request for a rate hike to 8 percent, meaning customers using 1,000 kilowatt hours of electricity per month would see their bills go up by about $6, Kentucky Power said.

But that tiny bit of good news gleaned from December’s Kentucky Power announcement was completely snuffed out Thursday when Kentucky Power officials announced that it would seek another huge increase in rates from the Public Service Commission.

A statement released by the power company, which is a subsidiary of American Electric Power, put the bad news this way: “While the overall impact on revenue is approximately 23 percent, the impact on residential customers will be approximately 31 percent due to the way revenues are allocated among customer classes based on usage, service charges and other factors. There are two mitigation measures in the filing that could effectively lessen the overall rate impact from 23 percent to 12 percent and the residential impact from approximately 31 percent to about 20 percent.”

Since not all of us can calculate the amount of a proposed rate increase by just knowing the percentages, Kentucky Power said if its proposal is approved by the PSC, it would elevate a $119.69 monthly residential bill to $156.93. For small businesses struggling to stay open in a sluggish economy such a large increase could easily drive them out of business or force them to raise their prices.

Kentucky House Majority Leader Rocky Adkins, D-Sandy Hook, whose district includes Lawrence County,  was livid over Kentucky Power’s Thursday announcement:

“Today the Kentucky Power Company issued a release that they would request a base rate increase tomorrow — which could be as high as 31 percent for residential customers — to cover costs of transferring power from West Virginia’s Mitchell plant to Big Sandy. This action validates what I’ve been saying all along, which is that Kentucky Power would file another rate case this summer to increase residential utility bills as much as 31 percent. I said it at the hearing in Louisa in May and at the Public Service Commission hearing earlier this month.

“What is even more surprising is that Kentucky Power will file the rate case for the possible 31 percent increase before the Public Service Commission has approved the transfer of the Mitchell assets. The potential 31 percent increase equals what Kentucky Power said would cost to fit the Big Sandy with scrubbers.  That’s the reason I’ve argued that it’s in the best interests of the rate payers, our economy and jobs, to put on the scrubbers at Big Sandy, a facility we’ve built and paid for over many decades.

“That is also the reason I have said this fight is worth fighting to keep the Big Sandy Power plant open,” Adkins wrote. “Most people feel pretty good when their predictions come true. Not this time.”

Well said.

Kentucky Power president and CEO Greg Pauley said the company is pursuing options which will be in the best interests of residential customers during the next 25 to 30 years.

“The filing of this case is necessary to begin recovery of costs associated with transferring the Mitchell plant assets to Kentucky Power and it is being filed in anticipation that the Public Service Commission will approve the asset transfer. The company needs to be able to collect costs associated with buying and operating the Mitchell plant at the time it assumes ownership of it,” Pauley said.

If this is in our “best interests,” why is it that area electric consumers are facing a huge increase in their electric bills AND a huge blow to the economy of the entire region, but particularly Lawrence County. What’s the bright side of that? There is none.

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