WEBSTER COUNTY, Ky. (1/23/12) - Electric rates for Western Kentucky residents who purchase their power through Kenergy could expect to pay around $24 more a month as soon as August 2013.
On Jan. 15, Big Rivers Electric Corp. filed for a rate increase with the Kentucky Public Service Commission (PSC).
Big Rivers, Kenergy’s wholesale power supplier, estimates a 19 percent rate increase for rural members, which include residential, commercial and small industrial members served at distribution voltages, and 17 percent for large industrial members, who are served at transmission voltages.
It is estimated the proposed increase will cost Kenergy’s average residential member about $24 more per month for electricity.
Big Rivers requested those increases, in part, because Century, a Hawesville aluminum smelter, provided notice in August of its intent to cease all smelting at its Hawesville facility and to end its power contract with Big Rivers.
Century uses about 39 percent of the power generated by Big Rivers. Therefore, Big Rivers estimates it needs more than $74 million per year to cover an anticipated revenue deficiency from Century departing the system, to meet Big Rivers’ financial obligations, and to maintain its facilities in order to provide reliable and safe electricity.
Because Big Rivers is Kenergy’s wholesale energy supplier, the co-op will be forced to file a “flow through” rate case with the PSC.
“We want our members to know that Kenergy and Big Rivers started strategizing immediately after we received Century’s termination notice,” said Greg Starheim, Kenergy President and CEO. “As member-owned nonprofits, we’ve been working on many fronts to reduce the impact of any rate increase to our members over time.”
Those efforts include working closely with state and local economic development officials to attract new businesses to the region. Over time, new business and industry could replace the load left behind by Century’s departure from Big Rivers’ system.
Also, Big Rivers is pursuing future options to sell the electrical load now used by Century, including marketing power to other utility companies.
In addition, Big Rivers has turned a critical eye on expenses. They report several cost-cutting measures that have been implemented to date.
Those include refinancing $442 million in debt to reduce annual interest expenses, deferred more than $19.5 million in plant maintenance in 2012, renegotiated fuel and reagent contracts in 2012, implemented continuous improvements to reduce unit heat rates in an effort to lower operational expenses, deferred filling a number of job vacancies, decreased company vehicle inventory and associated expenses, reduced employee benefit costs by adjusting medical coverage plan design, revising the eligibility requirements for post-retirement medical coverage (after 2013) and moving to a self-insured medical plan, and, to reduce operational expenses in the future, discussions have included idling or selling a power plant.
J-E News Editor
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