Owen Electric consumers
may see a bit of an increase in their monthly rates within the
next year. If approved, it will be the first time in 24 years
rates have gone up for the company.
East Kentucky Power Cooperative (EKPC) is the wholesale power
supplier for Owen Electric, as well as 15 other not-for-profit
cooperatives. Near the end of 2006, a notice was filed with
the Kentucky Public Service Commission (PSC) by East Kentucky
Power. The notice told of the cooperative’s intention
to file a rate case with the PSC.
“Our early estimations are that the impact would result
in a 4-percent to 6-percent increase,” said Kevin Osbourn,
who is in charge of media relations at EKPC.
Osbourn said the cooperative is looking to implement the rate
increase by April 1, “to avoid an increase during the
highest billing months (January and February).” The date
is subject to change, depending on the decision made by PSC.
A refund may also be in order if the increase is approved for
a lower amount. The last increase was 11.5 percent and was approved
in 1983. Rates were reduced 9.5 percent in 1995.
The proposed increase comes from a need to meet loan obligations
and deal with the dramatically increasing costs of fuel, coal,
pollution control equipment and other needs for producing electric
power, according to representatives of the cooperative.
“We’re working as hard as we can to keep rates as
low as possible,” Osbourn said. “We’d rather
not have any kind of increase.”
Other utilities around the country have raised their rates,
but to far greater amounts than the proposed increase for Owen
Electric.
“It’s not uncommon in the industry to see two-digit
rate hikes,” Osbourn said. “In comparison, this
is favorable.”
Another factor in the increasing cost is the higher consumption
of electricity. Osbourn sites the popularity and consumption
of iPods, computers and big-screen televisions as a factor in
the higher consumption in residences.
Though costs continue to increase, Osbourn said the cooperative
is working hard to keep costs for consumers low by looking at
ways to use different fuels and putting programs in place to
help keep costs down.
Mike Cobb, senior Vice President of Customer Service and Marketing
for Owen Electric, said the rate increase will have a direct
impact because 80 percent of the utility’s total operating
cost is made up by the cost of power.
With nothing set in stone and the case not yet filed, the specific
amount of the increase is unknown, as is when it will take place.
The proposed increase was mentioned in Owen Electric’s
monthly newsletter along with the promise of updates when more
information is available.
“We thought it was important to give our members notice,”
Cobb said.
If the proposed April 1 date is approved, the May bills will
be the first ones impacted by the change. If the increase is
5 to 6 percent, the typical residential bill will increase about
$4 or $5 more per month.
Another reason the cooperative wanted to get the word out was
to help their commercial accounts. Cobb said as their commercial
accounts set their budgets for the year, Owen Electric wanted
them to be aware of the possibility of the increase. It was
also mentioned in a billing insert this month.
“As we learn more, we will do our best to communicate
details,” Cobb said.
The consumer does have a voice in all of this.
“The (state) attorney general intervenes on behalf of
the public so no one is taken advantage of,” Cobb said.
In addition to the attorney general, other interested parties
may intervene after the rate case is filed. A date for a hearing
will be announced where the public can make comments concerning
their interests.
Andrew Melnykovych, a spokesman for the PSC, said once the case
is filed the commission will take a detailed look at a number
of things before they make a final decision. One thing they
look at is the ratio of debt to income.
“(We will look at) how much income they need to meet operating
expenses and service debt,” Melnykovych said.
Melnykovych said the process is very lengthy and detailed and
could take up to 10 months to complete once the case is filed.
He said the commission suspends the rate for five months from
the day of filing. After that time a decision can be made and
rates can be set. However, depending on the difference in the
final decision, a refund could be given if the proposed increase
is higher than the final number.
The consumers are the ones who will be affected most by the
change and Owen Electric, EKPC and PSC are aware of that.
“It’s been an ongoing focus of ours for years,”
Cobb said. “We do a lot to help our members save on their
electric bill.”
