Kentucky PSC to hold meetings on Big Rivers Electric rate issue

The Kentucky Public Service Commission said June 5 that it will hold a series of public information meetings on a contentious rate increase case for Big Rivers Electric, a largely coal-fired utility that is about to lose at least one major power customer.

A public meeting will be held on June 13 in Henderson, followed that evening by a video conference linking a public meeting in Owensboro with sites in Paducah and Brandenburg.

“These meetings are an opportunity for the public to learn how the PSC reaches a decision in cases such as this,” PSC Chairman David Armstrong said. “The meetings also allow the PSC to hear directly from ratepayers in these matters.”

Big Rivers is seeking approval to adjust rates to increase adjusted annual revenue by $74.5m. Of that, $63m is to partly offset the loss of revenue that will occur when the Century Aluminum Co. smelter in Hawesville ceases to be a customer in mid-August. Century Aluminum consumes about 40% of the power generated by Big Rivers.

The remaining portion of the $74.5m is needed for Big Rivers to maintain financial stability and meet its debt obligations, the utility has told the commission.

In its application, Big Rivers estimates that the rate changes will increase average monthly residential bills by about $24, or about 19%. Large industrial customers would see rates go up about 17%.

The current case does not take into consideration the impending loss of Big Rivers’ second-largest customer, the Rio Tinto Alcan aluminum smelter in Sebree, which has been purchased by Century Aluminum. It uses about one-fourth of the power Big Rivers produces and has announced its intention to close in January. Big Rivers has filed with the commission a notice of a second request for rate adjustment to account for the loss of the Alcan revenue.

Although Big Rivers and Century have been working toward an agreement that would keep both smelters operational – by allowing them to purchase cheaper power on the open market rather than from the utility – documents outlining the arrangement have not been filed with the PSC. If an agreement is reached, it will require review and approval by the PSC in a separate proceeding. Its impacts may be considered in connection with the current case.

In addition to the public meetings, the PSC will conduct a formal evidentiary hearing at its offices in Frankfort on July 1.

How this case is resolved will have a huge impact on the operation of Big Rivers’ coal-fired power plants. Big Rivers indicated in a fuel cost filing with the PSC earlier this year that it was holding off on making coal commitments beyond 2013 because of uncertainty about how much the plants would run.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.