Journal-Times (Grayson, KY)

Local News

January 9, 2013

Olive Hill electric rate study explained, scrutinized

(Continued)

Jan. 9, 2013 —

The rate study asserts an increase of only 3.9 percent in total cost to residential customers, while showing a decrease in total cost of 1.6 percent to commercial customers and 6.4 percent to industrial customers.

Further examination of the study data, however, reveals that the base rates used in these calculations are not consistent with the rates specified in the city’s current rate ordinance.

When compared to the current ordinance, residential rates per 100 kilowatt hours would actually increase by more than 100 percent ($5 to $10.23) if the proposed rate changes are adopted.

Commercial rates would see a jump of approximately 80 percent ($6 to $10.79 per 100 kilowatt hours) and industrial rates would increase by 73 percent ($6 to $10.38 per 100 kilowatt hours) in addition to new demand charges.

Laslie noted a Fuel Cost Adjustment (FCA) mechanism that he says the city uses to adjust rate prices each month, which could explain the difference between the rates outlined in the ordinance and the data he received, which shows customers paying higher rates.

The city’s response letter to a recent Attorney General inquiry, however, makes no mention of an FCA mechanism, but rather a Power Cost Adjustment (PCA) formula that is implemented by the city clerk, assistant city clerk, and utility office manager each month to determine costs in addition to the base rates set in the city’s electric ordinance.

A review of that ordinance, however, shows no provision for an FCA, PCA or any other adjustment mechanism that would allow for an additional charge above and beyond the base rates.

A new electric rate ordinance would have to be approved by majority vote of the City Council before any changes to customer rates could be implemented.

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

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