Office of the Attorney General
AG Conway Announces $54 Million Saved for Eastern KY Ratepayers in Fuel Cost Case

Press Release Date:  Thursday, January 22, 2015  
Contact Information:  Daniel Kemp
Deputy Communications Director
502-696-5659 (office)

FRANKFORT, Ky. – Attorney General Conway and his Office of Rate Intervention, along with the Kentucky Industrial Utility Customers (KIUC), today announced that they have saved eastern Kentucky ratepayers $54 million in unlawful fuel costs charged by Kentucky Power Co., the result of a successful intervention in a utility case previously before the Kentucky Public Service Commission (PSC).

In an order issued today by the PSC, the Commission deemed the fuel costs unreasonable and directed Kentucky Power to refund ratepayers $13.2 million that it had already collected during the first four months of last year.  Additionally, the PSC barred the company from collecting an estimated $41 million in additional fuel costs that was to be collected through the end of May 2015.  Over the 17-month period, the average residential customer will save approximately $155.

“As Attorney General, I am proud to serve as an advocate for Kentucky consumers, and at a time when every dollar saved can make a difference for so many Kentuckians, I’m pleased that we are keeping this money in the pockets of ratepayers in eastern Kentucky,” Attorney General Conway said.  “My Office of Rate Intervention and I work hard each day protecting Kentuckians from excessive utility rates.”

Kentucky law allows electric generating utilities to bill ratepayers for the reasonable costs of fuel required to run the generating plants on a monthly basis, and those charges appear each month on a customer’s monthly bill.  In today’s order, citing joint testimony from the Office of the Attorney General and KIUC, the PSC ruled that Kentucky Power violated PSC precedent and prior orders in the process it uses to determine fuel charges for ratepayers.

Additionally, in 2013, the PSC authorized Kentucky Power to purchase a 50-percent interest in the Mitchell power plant in West Virginia to replace the Big Sandy No. 2 generating unit in Louisa, Ky.  In its order, the Commission criticized Kentucky Power for failing to disclose the impact that its allocation of fuel costs would have on its ratepayers during the period when both the Mitchell plant and the Big Sandy plant remain operational. 

“Transparency is critical, and indeed one of the touchstone principles in the regulatory process,” the PSC said.  “The failure of Kentucky Power to disclose this information in the Mitchell Case is a matter of great concern to the Commission.”

Attorney General Conway opposed Kentucky Power’s plan to acquire the Mitchell plant as a replacement for the Big Sandy Unit 2 and appealed the PSC’s decision to the Franklin Circuit Court. The appeal is pending.

Office of Rate Intervention
The Office of Rate Intervention serves as a watchdog for consumers in matters relating to health insurance, natural gas, water, sewer, electric and telephone rates. Under Kentucky law, the office is responsible for representing the interests of Kentucky consumers before governmental rate making agencies, concentrating on utility cases (electric, water, telecommunications, and natural gas) before the Public Service Commission.  Since 2008, General Conway’s Office of Rate Intervention (ORI) has intervened in rate cases and other utility matters resulting in more than $1.18 billion in savings for Kentucky ratepayers.

You can follow Attorney General Conway on Twitter @kyoag, visit the Attorney General’s Facebook page or view videos on our YouTube channel.