Several Kentucky Power Company customers told the Kentucky Public Service Commission (PSC) that a proposed 30 percent rate increase would be difficult to afford.
Kentucky Power, a subsidiary of Columbus, Ohio-based American Electric Power, is requesting permission from the PSC to place an environmental surcharge on customers to pay for construction of a $940 million “scrubber” system and associated facilities to control air emissions from an 800-megawatt generating unit at the company’s Big Sandy power plant located near Louisa. Kentucky Power says the dry flue gas desulfurization (DFGD) system is required to comply with federal environmental rules affecting utilities that burn coal to generate electricity.
The PSC held a meeting at the Letcher County Central High School auditorium on April 5 to take public comments on the proposed rate increase. Meetings were also held last week in Louisa, Pikeville and Hazard.
“Within the last year we have been socked with a 17 percent increase in power bills,” said Ricky Yonts, of Deane. “This is hard for us to deal with on fixed incomes. It burns us to the point we have to sacrifice to make ends meet.”
Steve Litts, of Jenkins, said he and his family are conscious about how much electricity they consume in a 2,700-square-foot house.
“I think most citizens are,” said Litts. “This has become such an issue economically with the people of this state considering the expenses of gas, food, clothing and life in general.”
Litts said he already pays more than $300 a month to the power company.
“We use a minimal amount of electricity,” said Litts. “We keep our thermostat on 68. We maybe cook three meals a week in our home. So we are a very low maintenance family yet we are paying this kind of bill a month for electricity.”
Litts said he has lived in the same house for 40 years and has never seen a line change or an upgrade of any kind.
“The quality of our service is not getting better,” he said. “It is deteriorating yet the cost is increasing exponentially. We have had three power outages this year. One lasted 24 hours. We had three or four last year, one lasting for three days at my home, and I know many other people in eastern Kentucky had power outages that were significantly longer.”
Jon Henrikson, of Bull Creek, said the power company hasn’t efficiently used money the PSC granted the power company two years ago to cut trees that interrupt service.
Henrikson said power company employees made a mess on his property by cutting down nearly every tree and bush in sight and leaving them lying on the ground.
“I don’t know why they had to cut down rhododendron bushes and dogwood trees,” he said.
Henrikson told the PSC that things are in such a mess in his neighborhood that in December 2010 power was out at his son’s house, which is located across from him, but that his lights stayed on. Henrikson said his power is on a different line and his son and family were able to stay with him until their power was restored. Still, he said he doesn’t understand why both houses aren’t on the same line.
“If it is not working, we want to see it corrected,” said David Armstrong, chairman of the Kentucky PSC. “I can’t tell you how important it is for agencies to hear from individuals.”
Tammy Whitaker, an LKLP (Leslie, Knott, Letcher, Perry) Community Action Council employee, asked the PSC to consider those on low income who can’t afford to pay their bills now.
Dennis Morgan, of Huntington, W.Va., president of Teamsters Local Union 505, attended the hearing to speak in support of the power company’s request for the rate increase needed to pay for the scrubbers.
“AEP did not ask for these regulations to be placed on them and neither did the PSC,” said Morgan. “I hope and pray the PSC will find a way to hear the concerns of the economic impact of those on a fixed income while at the same time approve AEP’s request for to install scrubbers and maintain a clean environment.”
Robert Akin, director of Kentucky Laborers Employers Cooperation and Education Trust (LCET), drove to Whitesburg from his organization’s headquarters in Lawrenceburg to voice support of the power company’s request.
Also speaking to the PSC in support of the Kentucky Power’s plan was Chuck Dolen, who represents members of the Operative Plasterers’ and Cement Masons’ Association in Kentucky and southeastern Ohio.
“ You have 100 percent support on this project, “ Dolen said.
Kentucky Power Company, which has about 173,400 customers in Letcher County and 19 other counties in eastern Kentucky, is under a federal court order to install the scrubber by the end of 2015 if the company intends to continue burning coal at its Big Sandy plant near Louisa. Kentucky Power plans to retire an older, 278-megawatt coal-burning unit at Big Sandy at the end of 2014.
“I think it is a shame we are being punished for your change,” said Mill Creek resident Christopher Yonts. “Why is the responsibility put on the customers for something Kentucky Power is required to do?”
The company estimates that total monthly electric bills for a typical residential customer would increase by about $31 or 30 percent by 2016 if the $940 million project is approved. The company estimates that the monthly bill for a residential customer using 1,000 kilowatt-hours per month would increase from about $98 to about $129 in 2016. Individual bill increases would vary with electric consumption. A kilowatthour is the amount of electricity used by a 100- watt light bulb in 10 hours.
Litts told the PSC the cost of installing the scrubber does not call for a 30 percent rate increase.
“I think it is paramount that you people take this into consideration,” said Litts. “I certainly understand that Kentucky Power Co. and American Electric Power is in the business to make a profit and they certainly deserve to make a profit. But this is where I think some common sense (is needed) and it is your responsibility to consider how much of a profit they make.”
Chris Musgrave, a field representative for U.S. Senator Rand Paul, used the forum to read a statement from Paul about federal energy mandates.
“ This new rule from Washington will cost Americans more at the pump, more for utility bills and for some it will cost them their jobs and livelihoods,” Musgrave read from Paul’s statement.
State Rep. Leslie Combs, who did not attend the public hearing, submitted a letter to Armstrong in which she said “the people of southeastern Kentucky should not shoulder this burden.”
“The last thing they need now, especially on the heels of the last double digit increase Kentucky Power received, is another rate hike that will force many families to make stark choices no one should have to face,” Combs said in her letter. “ While my constituents and I certainly support increased economic development and reliable service, and are indeed sensitive to the increased regulatory burdens power companies face, we cannot support this increase, not when Kentucky Power’s parent company is experiencing such growth. Consider that American Power’s stock price over the last three years has jumped nearly 50 percent.”
Combs said those in favor of the power company’s proposal note that Kentucky’s electric rates are among the cheapest in the nation thanks in large measure to coal.
“ What is left unsaid, however, is that per capita cost of capital investment here is largely in line with the national average,” she said. “In other words, we get no break financially on building and upgrading the infrastructure needed to get electricity to our homes, schools and businesses. This proposed rate increase, then, would take us well beyond the national average.”
Since 1994, Kentucky laws and regulations have allowed utilities to recover environmental compliance costs separately from general rates. The costs are recovered through a surcharge that appears as a separate item on electric bills.
A scrubber or DFGD system uses chemical and mechanical processes to remove sulfur dioxide, or SO, produced by burning coal. It does this by “scrubbing” the gas produced from coal combustion when making electricity. Scrubbers can remove up to 98 percent of the SO from the flue gas stream. Scrubbers2 have been shown to remove oxidized mercury as well, Kentucky Power said in an earlier news release.
Kentucky Power announced plans last summer to convert the Big Sandy plant to natural gas, but later decided to stick with coal, most of which is supplied from mines in Appalachia.
The PSC presentation is available on the PSC website, psc.ky.gov. The PSC will conduct a formal evidentiary hearing in the case at 10 a.m. on April 30 in Frankfort. The public meeting will be broadcast live on PSC’s website.
Written comments concerning the proposed surcharge will be accepted through the conclusion of the evidentiary hearing. Comments may be mailed to the PSC at P.O. Box 615, Frankfort, Ky., 40601 or faxed to 502-564- 9625.