Journal-Times (Grayson, KY)

April 23, 2014

Olive Hill faces hefty bill from AEP

By Joe Lewis - Staff Writer
Journal-Times

April 23, 2014 — Olive Hill Mayor Kenny Fankell gave the City Council an update on electricity costs from American Electric Power (AEP) at last Tuesday’s meeting.

“I’ve got some news that you’re not going to like,” said Fankell.

He then informed that Council that preliminary estimates reveal the city will owe AEP more than $155,000 in “true-up” costs for this fiscal year.

The “true-up” is a final tally of power actually sold to the city. Each month, Olive Hill pays AEP an estimated cost based on past usage and other factors.

Those estimates, however, often fall short of the actual amount of power purchased from AEP.

During the true-up period, AEP calculates the difference in actual power purchased versus the estimated bills and informs the city of the difference.

Historically, the true-up has almost always ended up in AEP’s favor but last year the city received a refund check from the company for nearly $170,000 in overpayment.

“So you’re telling us that we’re going to have to pay this after we just transferred over $100,000 in profit from the utilities to the general fund? Where is the money going to come from?” asked Council member Glenn Meade.

Fankell recommended that the Council use the bulk of last year’s true-up refund to cover this year’s true-up costs.

“We are already looking at a five percent increase in our rates from AEP this year. I don’t want to pass on any more costs to our customers,” said Fankell.

Council originally had planned to use the refund money to purchase a new bucket truck for the utility department.

If the Council accepts Fankell’s recommendation, however, the city will have to find other means to either finance the purchase of a new vehicle or cover repair costs of the existing truck.

Fankell will meet with AEP alongside officials from Vanceburg’s utility plant board in early May to collectively bargain rates for the upcoming fiscal year.

AEP will present the city with its final true-up calculation at that meeting.

Olive Hill City Council will next meet on Tuesday, May 20, at 6 p.m. at the Senior Community Center on Railroad Street.

Joe Lewis can be reached at jlewis@journal-times.com or by telephone at 286-4201.