Recent savings on the price of gasoline at the pump may soon be erased by an increase in the monthly power bills of most Letcher County residents.
Kentucky Power Company, a subsidiary of American Electric Power (AEP), is asking the Kentucky Public Service Commission (PSC) to approve its request for an average rate increase of 12.48 percent.
If approved, the rate increase could take effect as early as January 23. According to a notice that will be filed with the PSC by December 23, Kentucky Power says the rate increase would increase a monthly bill for residential service that now costs $138.67 to $160.92, or $22.25.
“They’re going to kill us,” Letcher County Magistrate Wayne Fleming said of the proposed increase on Tuesday.
Pointing out that Social Security recipients and veterans are receiving a cost of living increase of only 1.7 percent on their benefits in 2015, Fleming said, “Now is not the time for a rate increase by Kentucky Power.”
Fleming, who represents the Jenkins area on the Letcher Fiscal Court, said he could understand the power company asking for cost of living increase similar to that being awarded to the elderly and veterans, but not the 12.48 percent increase that’s being proposed to the PSC.
“Eastern Kentucky people are just not capable right now of paying that,” said Fleming. “There’s no way the power company can justify that big of a rate increase right now.”
Whitesburg Mayor James Wiley Craft estimates the increase will cost the city at least $2,000 a month, but probably more.
Kentucky Power says the proposed increase is necessary to meet the increasing costs of federal Environmental Protection Agency rules. The company said the increase would also continue to pay for expanded tree trimming it agreed to undertake in an earlier settlement with the PSC. That agreement, which called for a “four-year trim cycle,” came in June 2010 when the PSC granted a 12.5 percent rate increase to Kentucky Power after the company promised to spend $10 million on “vegetation maintenance” in Letcher County and 19 other eastern Kentucky counties.
In a press release, Kentucky Power says its latest request for a rate increase completes the recovery of its remaining commitment to purchase half of the coal-fired Mitchell power plant in Moundsville, West Virginia. That sale, approved by the PSC in 2013, replaces nearly all of the 800 megawatts produced by Unit 2 at Big Sandy at Louisa, which is set to close in 2015.
The company says that purchasing the Mitchell plant will save it customers half a billion dollars over the $1 billion price tag of installing scrubbers on Big Sandy Unit 2. The scrubber option would have required a 31 percent rate increase to fund the equipment needed to meet new federal environmental rules, the company says.
“The Mitchell transaction has proven to be the most cost-effective choice we could have made for our customers as we work to comply with stricter EPA requirements,” said Greg Pauley, Kentucky Power’s president and chief operating officer. “We understand any increase is difficult for our customers. That’s why when we go before the Kentucky Public Service Commission for a rate adjustment, we do so only after a thorough review of the most economical way to serve our customers today and well into the future.”
Kentucky Power says the 12.48 percent increase would give it an additional $70 million with which to operate. The exact amount of the increase will vary by customer class and usage, the company says.
Nearly every service offered by Kentucky Power would increase if the Public Service Commission approves the proposed increase. For instance, the charges for reconnection after non-payment would increase from $35.95 after 10 p.m. to $95. Reconnections for non-payment on Sundays and holidays would increase from $44.50 to $124.00. Returned check fees will increase from $7.00 to $18.00, and the charge for a meter test will jump from $14.38 to $48.00 if the test shows the meter is no more than twopercent fast.
Under the proposal, residential customers using an average 1,362 kilowatt hours per month would see an increase on their monthly bills of about $22, or about 72 cents a day. Under the scrubber plan to meet EPA mandates, the average residential bill would have jumped nearly $43 a month, or $1.41 a day, the company says.
Fleming predicts there is little chance the PSC will question the rate increase.
“ Until we get a PSC that’s for the customer we don’t have a chance,” he said. “They (the PSC) are going to make us pay for all of Kentucky Power’s past mistakes.”