JPEC to fight electric rate hike

(Filed Feb. 5, 2013) Paducah- Jackson Purchase Energy Corporation said last Thursday, January 31, 2013 it is intervening with the Kentucky Public Service Commission in a Big Rivers Electric Corporation rate case which will increase electric rates to JPEC members.

In a news release last week from the Kentucky Public Service Commission the rate increase was projected at 45 cents per kilowatt hour for every JPEC customer.

“Our board of directors feels strongly that JPEC, through its management and legal team, needs a seat at the table in the rate case to protect the interest of our member owners, and we will fight to keep the impact on our members to a minimum,” said Gary Joiner, JPEC board chairman.

Big Rivers is the power supplier to JPEC. The primary reason for the Big Rivers rate request is Century Aluminum’s termination of its power purchase contract effective August 20, 2013.

Century, which operates an aluminum smelter in Hawesville, Ky., purchases nearly 40 percent of the power produced by Big Rivers. Big Rivers said the loss of that customer and the increase in costs in other areas of the business would mean it needs approximately $74 million per year to maintain its financial obligations and continue to provide electric service to its members including JPEC.

The filing by Big Rivers envisions rate increases for all customers—residential, commercial and industrial. The amount of the increase is subject to questioning by the various intervenors in the case, including JPEC, and the final decision on the increases will be determined by the Public Service Commission.

Big Rivers and JPEC both say they are going to work hard to lessen the blow to their members, including aggressively seeking new industrial customers and cutting costs.
“No one likes an increase in rates to our members, especially when it is primarily caused by factors totally beyond our control,” said JPEC CEO Kelly Nuckols. “Both JPEC and Big Rivers hope to find replacement buyers of electricity and other means of compensating for the loss of 40 percent of Big Rivers’ production. No matter how large the increase, we are hopeful that it can be lessened in the future as any large, new industrial users are added to the customer base.”

The JPEC board of directors, which voted in August to oppose any corporate bailout that would be unfair to its members, in its intervention will urge the Public Service Commission staff to look closely at not only the overall amount of the increase, but also at the way Big Rivers proposes the rate increase be allocated to make sure it is equitable.

“We are absolutely in favor of retaining jobs in the Big Rivers service area, and gaining new jobs for the region,” said JPEC board chair Joiner, “but we also believe that any rate increase caused by Century Aluminum should be allocated equitably among all of Big Rivers’ member-owners.

“The JPEC board believes it is wrong for the utility to pick winners and losers in a rate increase proceeding,” Joiner continued. “Instead, we favor rates that are applied equitably, based on the cost of service to the customer class.”
The rate case filed by Big Rivers is PSC Case # 2012-00535, and information on it is available on the PSC’s website, psc.ky.gov.