Journal-Times (Grayson, KY)

Local News

January 23, 2013

Electric rate lawsuit filed against Olive Hill

Jan. 23, 2013 — A complaint that may become a class action lawsuit was filed in Carter Circuit Court on Thursday against the City of Olive Hill.

Several members of the community allege that the residents of Olive Hill have been charged “unlawful, excessive and unreasonable electric fees” since August 2000.

In the complaint, attorneys Mike Fox and Reid Glass are seeking class action certification. If the suit is given such status, all customers who have paid electric fees since August 2000 would become plaintiffs as a group or class.

Without the certification, potential plaintiffs would have to join the suit separately or file their own actions.

According to the complaint, the plaintiffs were unaware that they were being charged excessive fees until the fall of 2012.  

An article printed in the Sept. 12 edition of the Journal-Times addressed the issue and several people in the community approached Fox.

Fox and Glass claim that the City of Olive Hill “…knowingly, intentionally, and unlawfully charged and collected…substantial amounts of electric service fees” that exceeded the amount they were legally allowed to collect, as established by ordinance.

According to the city’s existing electric rate ordinance, which was adopted in 2000, residential customers should be charged a flat fee of $6 and a usage rate of $5 per 100 kilowatt hours. It also specifies a $12 flat rate for commercial business and $14 flat rate for industrial customers with both charged a usage rate of $6 per 100 kilowatt hours.

However, according to the Journal-Times article, there appear to be discrepancies between the rates outlined in this city ordinance and the amounts that customers are actually being charged for their electricity.

Although the amount fluctuated, customers appeared to be paying as much as double the rate set by the ordinance.

A provision in the ordinance asserts that each time electric costs go up, “the City should not adopt a new ordinance at the time of said rate increase.” Much of the 24-page document is devoted to that provision, claiming that it makes the ordinance unlawful and is a violation of the state constitution.

KRS 96.534 states that “...rates charged for services by municipally-owned electric utilities shall not be increased except after a public hearing following reasonable notice thereof.”

Fox and Glass argue that the provision also is a violation of the Consumer Protection Act. The complaint states that the city included the provision in the ordinance, in essence, to avoid public hearings, increase rates while avoiding questions from the public and to keep people who may question the rates from being able to prove anything.

The complaint claims that the City of Olive Hill unlawfully delegated its authority to set the electric rate, and in doing so violated the Open Meetings Act, and did not comply with KRS 96.534. It does not, however, detail to whom that authority was delegated.

Fox and Glass allege that the city “conferred a substantial financial benefit” which they should not be allowed to keep.

The claim states that the bills sent out to utility customers since August 2000 made false claims with a “reckless disregard for truth.”

Finally, the plaintiffs claim that the city also violated the Consumer Protection Act through fraudulent billing practices and by making “false and misleading” statements about electric rates and services.

The complaint requests that all excess fees paid to the City be returned to the plaintiffs, in addition to their attorney fees, the cost of the lawsuit, and anything else to which the plaintiffs appear entitled.

Tim and Kim Johnson, Michael and Chesla Fox, Paul and Sarah Lewis, Rocky Stephens, Randy Steele, David Hurly, Deborah Frazier, Sally James and Lovell Gilliam are listed as plaintiffs while the City of Olive Hill and “unknown person and persons” are listed as defendants.

The City of Olive Hill is a member of the Kentucky League of Cities, which insures its members and offers legal services in some cases.

(Editor’s Note – A lawsuit generally states only one side of a dispute between two or more parties.)

Leeann Akers can be reached at lakers@journal-times.com or by phone at 474-5101.

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