Apr 14 - McClatchy-Tribune Regional News - Kenneth Hart The Daily Independent, Ashland, Ky.



This just in: People aren't happy about the prospect of seeing their monthly electric bills go up by 34 percent.

That much was obvious during a public meeting convened Tuesday by the Kentucky Public Service Commission about a rate increase requested by Kentucky Power Co.

The purpose of the meeting was for the PSC to receive comments from the public about whether the proposed new rates are "fair, just and reasonable," said Jim Gardner, the agency's vice chairman.

Those who spoke during the session, which was in the building that once served as Kentucky Power's headquarters, answered that question with a resounding "no."

 People used words like "outlandish," outrageous" and even "demeaning" to describe the proposed increase, which, according to Kentucky Power, would cost the average residential customer about $38 a month, or $456 a year.

About 60 showed up for the session. Many of those who spoke expressed concern that an increase in electrical rates could have a ripple effect on the region's economy, resulting in higher prices for goods and services, as well as lost jobs.

Others said a 34 percent rate hike would be devastating for senior citizens and others living on fixed incomes, particularly since most pensioners didn't receive cost-of-living increases this year.

"You are financially killing off an entire group of people with this rate increase," said Yvonne Cubbison of Ashland. "You should be ashamed of yourselves for even considering this idiocy."

Others said a rate increase of more than one-third was simply unreasonable, particularly during a period of economic downturn.

"If the guy at the corner gas station raises his prices by that much, the government's going to charge him with price-gouging," said Jim White of Grayson.

Pam Jordan, who owns Jordan Ice of Greenup with her husband, Larry, said she understood that Kentucky Power might need to raise his rates, but that she believed the increases proposed by the company "will put a major hurt on all of us,"

Jordan said her company paid about $61,000 for electricity last year. The company struggled during summer because of unseasonably cool weather, "but our electric bills came just the same," she said.

Under the proposed rate structure, businesses like Jordan's would have their rates increased by just over 21 percent, while industrial users would see their rates go up by about 15 percent.

Kentucky Power officials attended Tuesday's meeting but didn't have a speaking role in the proceedings. However, they did meet earlier in the day with members of The Independent's editorial board.

One of the reasons the utility is seeking the rate increase is seeking more of a rate increase for its residential customers than for its commercial and industrial users is that it wants to reduce the amount its larger users have to subsidize for providing for everyone, said Tim Mosher, Kentucky Power's president and chief operating officer.

Currently, the utility actually loses money on providing residential service, Mosher said.

The proposed rate increases would generate about $123 million a year. Of that, about $14.5 million would be associated with the cost of complying with what the company anticipates will be a government mandate to increase its use of renewable energy, said Errol Wagner, Kentucky Power's director of regulatory services.

Another $14 million to $16 million would fall under the heading of "reliability," and would be used to fund services such as tree-trimming and removal, Wagner said.

However, the large chunk of the revenue generated by the rate increases -- about $50 million -- would go toward boosting Kentucky Power's return on investment. Last year, that rate was just over 1 percent, and the utility is hoping to bump it up to about 8.5 percent, Wagner said.

Power company officials acknowledged the timing of the rate increase request was not the best in light of the ongoing economic slump and the December snowstorm that resulted in many Kentucky Power customers being without electricity for days and weeks.

Officials also insisted they believed the proposed rates were the minimum necessary to keep the company in the black, and they weren't, as many have speculated, asking for much more than they could reasonably expect to receive as a bargaining ploy.

Kentucky Power, which services about 176,000 customers in 20 counties, last sought a rate increase in the fall of 2005.

Meetings similar to the one Tuesday in Ashland are planned next week in Pikeville and Hazard. An evidentiary hearing in the case, during which Kentucky Power representatives will appear before the PSC, will be May 25 in Frankfort.

KENNETH HART can be reached at khart@dailyindependent.com or (606) 326-2654.

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