PIKEVILLE — With speakers conjuring images of senior citizens being unable to afford medications to coal miners losing their jobs, emotions and rhetoric were highly charged Wednesday night, during one of four Public Service Commission meetings to gauge public sentiment over a 30 percent rate hike proposed by Kentucky Power.
Before the comment period began, PSC spokesman Andrew Melnykovych gave a brief overview of the project behind proposed increase, which grew out of a federal consent decree that Kentucky Power either bring sulfur dioxide and nitrogen dioxide emissions from its Big Sandy power plant in Louisa into line with the Clean Air Act by the end of 2015, or stop burning coal at the facility altogether. The utility’s plan in response is to shutter the smaller of its two generators at the facility and install a nearly $1 billion scrubber on the other one.
Melnykovych explained that a 1992 state law allows utilities forced to bring coal-burning plants into compliance with environmental regulations to pass the entire cost of the construction and operation of those improvements to customers through a surcharge on monthly bills. Kentucky Power has proposed a 30 percent surcharge to recoup $1.07 billion, although only $940 million of that amount is expected to fund the Big Sandy project. The remaining $67 million would be spent on improvements at out-of-state power plants that provide a portion of the electricity used by Kentucky Power customers.
Under the law, the PSC is not allowed to consider whether the project is necessary, but merely whether it presents the least costly alternative. As such, Melnykovych urged the 61 people who attended the hearing to confine their remarks to whether the project met those criteria.
“If you get up and say the environmental regulations are ridiculous, that will have no bearing on this hearing,” Melnykovych said.
Many of Wednesday night’s speakers spoke solely on the inability of many customers to pay another 30 percent, on top of a 17 percent rate increase Kentucky Power sought and obtained last year.
Garlene Layne-Abshire, of Kimper, said she does not know how she will be able to afford another $90 on top of her $300-a-month electric bill. She said she already struggles to support her disabled son and husband on her teacher’s salary.
“I understand what they’re doing and I kind of agree with what they’re doing, but we’re being penalized for living in coal country,” Layne-Abshire said.
Pike County Judge-Executive Wayne T. Rutherford was among the evening’s most fiery speakers, urging the PSC to reject the environmental surcharge. Rutherford said he put his staff on to combing through Kentucky Power’s 237-page proposal early on, and they found “hidden details buried in the language.”
One of Rutherford’s most striking allegations was that the plan will result in coal jobs being lost. He said once the scrubber is operational, Kentucky Power will be able to cut its use of Kentucky coal in half, thereby spelling an end to 250 of the 500 mining jobs that rely on the Louisa plant, because Kentucky Power would be able to reduce its fuel costs by 8 percent by purchasing high-sulfur coal from Illinois and Pennsylvania. He added that the lost jobs would mean $12.5 million in lost wages, $4 million in lost coal severance tax and $82.5 million in lost coal sales.
“Kentucky Power has proposed these changes based upon retaining coal as a fuel source,” Rutherford said. “They have not publicized that the biggest impact will be to improve the economies of south Illinois and Indiana and northern West Virginia and western Pennsylvania, thus potentially depriving Kentucky residents of good-paying jobs.
“What also is disturbing is that while the mandate from the Kentucky General Assembly is for all power companies in Kentucky to use in so far as possible Kentucky natural resources, Kentucky Power Company is attempting to have approved by the Kentucky Public Service Commission a plan that will eliminate Kentucky jobs and harm Kentucky workers.”
State Rep. Leslie Combs was not at the meeting but did support a letter to the PSC, criticizing Kentucky Power for placing the entire burden on the backs of customers, when the company is enjoying record profits. She pointed to the fact that American Electric Power, the corporate parent of Kentucky Power, has seen its stock price skyrocket 50 percent over the past three years. She said Kentucky Power’s customers have not been nearly as fortunate.
“It is time for Kentucky Power to do more than improve its bottom line at the expense of its customers,” Combs said. “It is time for Kentucky Power to invest more capital here, to take on the responsibilities it is called upon to accept.”
Eugene Gibbs, representing the Pike County Senior Citizens Board, urged the PSC to remember the human toll the rate hike would impose. He told a story about an elderly woman who came to him, unable to afford a $300 power bill, because she only received $600 a month and used that money to also pay for food and medicine. He then described watching the woman cut her prescription pills in half, “turning one month’s worth of pills into a two-month supply.”
“In the 21st century, in this country, that should not happen,” Gibbs said.
But not everyone who attended Wednesday’s hearing was against the proposal. Former Gov. Paul Patton addressed the PSC and called Kentucky Power “a very responsible and concerned corporate citizen.” He urged commissioners to exercise their duty according to the law, and hinted at more dire consequences than higher bills, if the proposal failed.
“This is a major increase,” Patton said. “This will be a hardship on a lot of people … But you know what I want more than cheap electricity? I want electricity.”
Several representatives of organized labor were on hand, and while many said they sympathized with having to pay higher bills, they all voiced support for the project.
Dennis Morgan, president of Teamsters Local 505, said the scrubber construction would allow the Big Sandy plant to continue to burn at least some Kentucky coal. Otherwise, the plant could close completely.
“That then leaves these folks here to rely on someone far from here to provide electricity,” Morgan said.
PSC Chairman David Armstrong said the issue is one of extreme importance and, for that reason, the commission wants to hear from as many people as possible about the proposal. He invited those interested in the case to explore it more in depth at the PSC’s website, www.psc.ky.gov. The Kentucky Power request is filed under case number 2011-00401.
In addition to the public meetings, the PSC will conduct a formal evidentiary hearing in the case beginning at 10 a.m. on Monday, April 30. The hearing will be held at the PSC offices at 211 Sower Boulevard in Frankfort. It will be open to the public and may be viewed live on the PSC website.
Written comments will be accepted through the conclusion of the evidentiary hearing. They may be mailed to the PSC at P.O. Box 615, Frankfort, KY 40602, faxed to (502) 564-9625, e-mailed from the PSC website or submitted in person at the public meetings or at the PSC offices.
In addition to Wednesday’s hearing in Pikeville, other hearings were held in Louisa, Whitesburg and Hazard.
The PSC is expected to rule on Kentucky Power’s request by mid-June. If granted, customers would begin paying the environmental surcharge beginning with their first bill in 2016.