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Manufacturers Facing More Challenges

David HamiltonWESTERN KY (6/21/12) - Area manufacturers received some mixed news about one of their largest costs of doing business - energy and utility costs. Manufacturers, many still reeling from the recession and fearing the economy will slip back into recession, were attentive as some of the largest utility providers discussed a near term outlook.

On the positive side, Robert Cook and Craig Rice from Atmos Energy reported that natural gas prices are stable and production continues to outpace consumption. The expectation is that prices will remain fairly stable for some time to come. They also expect expanded use of compressed natural gas (CNG) to power trucks and automobiles.

cook riceOn the negative side, coal-fired electric generation is in trouble. EPA regulations and general disfavor by Washington D.C. will prevent any new coal generating plans from being built. These same regulations and other factors will result in the closure of 450 coal plants over the next 8 years.

There was little question from the manufacturers that Kentucky's economy and employment will be severely impacted by these closures. One attendee predicts that the Western Kentucky Coalfields will suffer a catastrophic decline in direct jobs and support industries.

The immediate effect of the new EPA mandates will continue to push electricity rates higher. David Hamilton with Kenergy told the manufacturers that customers should expect a 2% increase in electric rates on July 1st and another 6% rate increase later as Big Rivers is facing a $300,000,000.00 cost to meet new EPA guidelines. Kenergy is supplied electricity by Big Rivers Electric. Big Rivers has 3 coal plants and one natural gas unit to assist during peak demand.Larry Davis

Kentucky Utilities is also pushing for a 6.5% rate increase this year which would add $7.25 per month for a 1,000 kWh user. KU has already posted a 6% wholesale rate increase for its wholesale customers. Madisonville Mayor, David Jackson, said that the Madisonville City Council had built in a $250,000 "buy down" of the KU rate. The result will be a 4.7% increase rather than the 6% or over that would be expected. Electrical superintendent, Jim Asbury, said the rate increase would be added to the Power Cost Adjustment (PCA) line on customer's utility bills.

Jim AsburySteve Oakley who heads up Madisonville's water distribution said that there will not be a water rate increase this year. Oakley said that the city was operating the Green River Pump Station to transfer 9 million gallons per day to Lake Pee Wee. He said that about 2 million gallons of water is lost to evaporation each day and the city is using 4 to 5 million gallons.

Mayor Jackson said that he would approach city council about giving customers a break in the sewer charges that are based on water usage. Many customers are having to water plants and yards because of the drought. Sewer charges are based on water usage. The water used to water plants and lawns does not come back for sewage treatment.

 

regional trends

Ron Sanders
SurfKY News

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