2017-11-08 / News

Rep. Hatton among officials urging PSC to block rate hike request by Kentucky Power

By MARY MEADOWS Appalachian Newspapers

Kentucky Power’s Marshall Ison, left, and Jeff Baker, based in Whitesburg, were among 85 Kentucky Power crews and contractors who traveled North last week to assist with restoration efforts in Maine and Connecticut following Tropical Storm Philippe. Ison and Baker were helping in Maine. Kentucky Power’s Marshall Ison, left, and Jeff Baker, based in Whitesburg, were among 85 Kentucky Power crews and contractors who traveled North last week to assist with restoration efforts in Maine and Connecticut following Tropical Storm Philippe. Ison and Baker were helping in Maine. PRESTONSBURG

When the Kentucky Public Service Commission approves rates for utility companies, it works to ensure those rates are “fair, just and reasonable” to that company’s investors and customers.

People who spoke at a public hearing the PSC held on the AEP/Kentucky Power rate increase application repeatedly used those words to ask the PSC to deny a 15 percent rate increase request.

Retired teacher Molly McGuire, went further than that a hearing in Prestonsburg on November 2. Complaining about salary increases company officials have gotten since 2012, she asked the PSC to deny the current rate request and “claw back” a rate increase the agency gave Kentucky Power in 2015.

“I’m sure there’s a hell of a lot of waste in that company and they need to tighten their belts,” she said.

Pointing out numerous rate increases AEP received since 2005, 93rd District State Rep. Chris Harris made the same suggestion, saying he filed legislation last year asking the PSC to review the company’s last rate increase.

He also noted that, since 2005, the company’s stock price increased by more than 100 percent, and its dividends for shareholders increased by more than 70 percent. He and many others voiced strong opposition to the company’s economic development grant program. Part of the rate increase application seeks a 10-cent increase in the cost of the rider, which will be matched by stockholders.

“We don’t need a team of economic development coordinators paid for out of our power bills. We want safe, reliable, bare-bones electricity,” Harris said to applause from the audience. “That’s what we want. We don’t need all these other things that Kentucky Power is trying to do and that they’re dumping on the customers. We want a simple, safe, secure, service at the lowest cost and I hope and pray that you all will help us get that.”

Harris, Floyd County Judge/Executive Ben Hale, 95th District State Rep. Larry Brown, 31st District State Sen. Ray Jones and 94th District state Rep. Angie Hatton all asked the PSC to deny the request.

They used terms like “ridiculous,” “devastating” and “too harsh,” to explain that Kentucky Power’s request is not “fair, just or reasonable,” and they complained that the company has an “absolute monopoly” in this region, is “out of touch” with the people it serves and their needs and said the rate increase would hinder economic development and make it “impossible” for residents who are already struggling.

“It is ridiculous, obscene and unconscionable to expect Kentucky Power’s customers to be asked to make Kentucky Power whole for the decline in the economy when Kentucky Power is one of the main contributors for such a loss in its service territory,” Hale said.

They talked about the region’s poverty and how an increase would impact residents, businesses, local governments and schools. Some of them pointed out what Jones called “examples of some of the arrogance” he has seen in the company’s “corporate hierarchy.”

He talked about Facebook posts of company officials attending an airshow in France and the Greerbriar Classic golf tournament, as well as economic development grants it gives and its sponsorship of the Kentucky Chamber of Commerce.

“ You know, you have to ask yourself, if they’re hurting so bad for money, maybe they need to look internally,” he said, pointing out that AEP official flew three jets to Frankfort during the legislative session.

He suggested local governments would have more money for economic development if they didn’t have such high power bills.

Complaining about $388,000 in corporate jet travel at AEP, Hatton said the request is ironic.

“It’s funny that because so many businesses have closed and so many people have been laid off and been forced to move away, that now, we have to pay more in our electric rate because of that, so the poorest people are paying the most, and that isn’t fair or just or reasonable,” she said.

She said increasing rates will put people’s lives in danger.

“And it’s beyond ironic that this region that for two centuries has kept the power on in this country for us will now be struggling to pay our own power bills,” Hatton said. “The irony is not fair, just or reasonable.”

PSC officials reported that 70 people turned out for the hearing — one of three the PSC had scheduled — and none of the 30 who spoke approved of the rate increase.

Two of them, Jordan Gibson, president of the Southeast Kentucky Chamber of Commerce and Charles “Chuck” Sexton of One East Kentucky, talked about the importance of the company’s economic development rider — funds customers pay that are matched by its stockholders and are then granted out to for economic development projects. Kentucky Power started this program to encourage more business development in the eastern Kentucky counties it serves — and the program is geared to help it bring in more customers. Officials there cited a declining customer base as a major reason for its requested 15 percent increase.

Other commenters complained about that program and repeatedly told PSC members they can’t afford increases in power bills, calling the proposed rates unfair, unjust and unreasonable.

“I feel like it’s going to be a very long winter for a lot of people if these rates are not rejected,” Floyd County Master Commissioner and attorney Ashley Tackett Laferty said.

Commenting on the rate of return AEP is seeking, Prestonsburg resident Bryan Lafferty asked about the “rate of return” for people who want to live here.

“We deserve the opportunity to live in Floyd County and we deserve the opportunity to have fair, just and reasonable electric bills,” he said.

Joey Collins, of McDowell, said several people asked him to speak on their behalf, talking about how they rely on senior citizen centers and other agencies to get food and other needs.

“There’s a family that wants me to tell you right now they’re sick and tired of living on potted meat and crackers all month so that they can pay their utilities and scrape enough money together to buy their prescriptions,” he said.

Jeanie Layne, of Pikeville, said Kentucky Power’s rates are already “outrageous” and said businesses won’t move into the region unless they have a reasonable electric rate. She talked about a company she worked for that reduced expenses when it lost funding.

“We quit giving to charitable organizations and we cut expenses in every corner, and that’s what we need AEP to do,” she said.

Mike Howell, director of the Big Sandy Community Action Program, detailed the poverty in the region, reporting that 43,000 people in its service area are living in poverty and are already unable to pay their bills. He said AEP received $1.3 million of the $2.8 million, or 46 percent of the total given, in LIHEAP funds that his agency gave to help people pay heating bills last year.

“To ask these people to pay more, when they already can’t pay without assistance, is unthinkable,” he said, saying the increase will be an “economic disaster.”

Paintsville resident Robert Johns, director of the Appalachian Research and Defense Fund, also emphasized the region’s poverty, talking about “heart-wrenching” decisions people have to make to stay afloat.

“Do you pay for your rent or mortgage? Do you pay for your prescriptions? Or, do you pay for food or do you pay for utilities to keep the lights on and the heat on?” he said. “They are faced with those kind of decisions every day and this rate increase will make matters worse and the situation more difficult.”

Cory Russell was one of the more vocal commenters, complaining about several issues. He said a $100,000 grant AEP gave to Marion Branch development site recently in Pikeville was a waste of money.

“I can promise you that CAM Mining did not leave that property in a situation where you needed to spend $100,000 to make sure that it was okay to build on,” he said, to applause to the audience. “I’m a major advocate of that property. It’s very needed for Pike County, but we didn’t need to waste $100,000 and then let AEP come in and say, ‘Well, we helped.’ No, you didn’t help. You didn’t do a damn thing. You come in and said we’re going to give you some money. Well, if you really want to help, put it toward our power bill.”

He also complained about the lack of competition for utility service pointing to one of the frequently asked questions on the PSC website — “Why can’t you pick the utility you want.” He noted the PSC’s answer to that question is that competition in electric and natural gas utilities is “being considered.” He said that decision is taking too long and rates won’t go down until AEP has competition.

Reporting he is a pastor, Michael Newsome, of Pikeville, said the increase would hurt the bottom line at a car wash he owns in Regina and a small construction business he owns. He said his electric bill is higher than his water bill at that car wash and his businesses have lost customers, just like Kentucky Power.

“What’s the incentive, if every time AEP comes and says, ‘Give us money’ and we just shell it out, what’s the incentive to go to management and make your company lean?” he asked.

Kentucky Power seeks an additional $63.3 million in revenues and a targeted rate of return on equity of about 10.31 percent. If approved, the new rates would increase the total average customer bill from around $142 per month to about $163.

Spokesperson Allison D. Barker said the company is not making its request lightly.

“We want all of our customers to know that Kentucky Power does not request a rate review lightly,” she said in a statement. “Many of the accusations we have heard are not true. The same economic challenges facing our communities also affect our company. To place the blame for eastern Kentucky’s challenging economy on a single eastern Kentucky business is unfounded.”

She said the company is “focused on the longterm strength of eastern Kentucky,” which is why it is reducing spending and is committed to economic development.”

“Kentucky Power is leading the charge to diversify the economy and bring jobs to the region. When new businesses come to our area, customers gain jobs, the government gains taxpayers and we gain new industrial and residential customers. These efforts control costs for everyone,” she wrote.

She encourages people to contact the company at (800) 572-1113 if they have issues or concerns.

The company suggested a settlement in the case recently, and an informal hearing was held to consider it. No details about that proposed settlement have been released.

Written comments will be accepted through December 6. They may be mailed to the PSC at P.O. Box 615, Frankfort, Kentucky 40602, faxed to 502- 564-3460, e-mailed from the PSC website, psc.ky.gov. Commenters must note the case number, 2017-00179.

Cha i rman Michael Schmitt said commission members will review all comments submitted. About 150 comments have already been filed, he said.

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