Debate over power bills

By Sam Neace - [email protected]

Courtesy photo | Many people are speaking out over power bills in the mountains.

UPDATE Feb. 17 9:45 a.m.: Rep. Chris Fugate and Senator Brandon Smith, along with other representatives, held a meeting with the Public Service Commission on Feb. 16 about this issue. On Feb. 16, Chris Fugate posted this message via his Facebook timeline: “We finished the meeting with the Public Service Commission this morning. The current Public Service Commission is a different membered commission than the one from 2012. They told us in this meeting today that they would be opening an investigation into the issues that we presented to them. Thanks for all your support!!”

HAZARD — Much of the public’s interest this year has focused on increased bills from Kentucky Power. The Hazard Herald published an article a couple of weeks ago about a petition that was recently started in regards to rising power bills in Southeastern Kentucky. This week, the Hazard Herald also published an article about the recent Community Outreach Workshop Kentucky Power held in Hazard. The list of people speaking in regards to this issue includes local citizens from all walks of life. This is what some of those people have said.

On Feb. 7, William Hall of Hazard sent a letter to the Hazard Herald, along with the Lexington Herald Leader, elected officials at all levels and AEP officials. Mr. Hall said:

Enclosed is a copy of one of my electric bills for your review. I consider this bill to be outrageous as compared to KU (Kentucky Utilities). I have a house is Lexington and it appears that AEP bills are double. I have heard complaints from many friends and residents in Hazard, KY that feel also that our electric bills are totally out of hand. It appears that the Public Service Commission is unable to regulate AEP. Having utility bills this high in our area leaves many people in danger of freezing and being left in the dark. We are being taken advantage of. As you are well aware, Eastern Kentucky is economically depressed and unable to attract new opportunity, with our electric so extremely high. It’s all most people in our area can do to pay their electric bill. It’s time our elected officials do something to help this situation. I am really writing this letter on behalf of the people who have not moved out of Eastern Kentucky. I hope you will take some action to get these bills lowered immediately. It appears that AEP is a poorly managed company and we are in need of a different utility. I am chairman of my church and this is some of the things that has been brought to my attention.

On the local level, Rep. Chris Fugate did send out a call for citizens to relay their electric bill information to him. Petitions regarding this issue also are structured to the attention of government officials at all levels, in hopes of starting a discussion about the cost. In Jackson last month, the City Commission engaged in a conversation about how the rise in electricity bills has become a concern for some City operated buildings.

The rising bills have perhaps been most troubling for citizens on fixed incomes. In the Hazard Herald article about one of the petitions started because of rising energy bills locally, a citizen was quoted as stating, “Our bill has tripled over three months. We both are on disability and absolutely cannot afford this. It’s not the electric costs we are complaining about. It’s all the added on charges. They amount to more than the original bill.”

Jeff Pennington, who started the petition, echoed some of William Hall’s arguments.

“What we want, as our Facebook page says; we don’t want free, we want fair,” said Pennington, “I recently viewed a bill of a person in Lexington and they were charged approximately $109 for electricity. They had an environmental surcharge of $4. I was charged $45 for the environmental surcharge. Based off that alone I think it is safe to say that AEP and the Public Service Commission are punishing Appalachian citizens for coal mining.”

Kentucky Power has addressed some of the debated subjects. The company has pointed out that certain riders are put in place to cover various costs, such as the Big Sandy Retirement Rider, which is in place to cover the cost of decommissioned equipment. Ranie Wohnhas, Managing Director of Regulatory and Finance for Kentucky Power, told WYMT in a Feb. 9 report that it will take Kentucky Power about 25 years to recover $200 million dollars in expenses.

In AEP’s report about 2016 fourth quarter and year end earnings, Nicholas Akins, chairman, president and CEO, displays an optimistic attitude toward AEP’s potential to expand profits for investors in the near future.

“In 2016, we were able to successfully grow operating earnings and offset the challenges to our competitive business from deregulation in Ohio. We also increased our quarterly dividend payment by 5.4 percent to 59 cents per share based on our strong balance sheet and optimism about our future growth,” Akins says in the report.

Akins goes on to say, “Our transmission business continues to bolster earnings, contributing 54 cents to earnings for the year, an increase of more than 38 percent from 2015. Additionally, we benefited from successful regulatory proceedings in several states, reflecting increased investments to improve service for our customers, and reached a global settlement agreement in Ohio to resolve a significant number of outstanding regulatory and legal cases.

We expect to complete the sale of four competitive power plants soon, and we will reduce debt and reinvest net proceeds from that sale in our regulated businesses to support future earnings growth. We wrote down our remaining competitive generation assets in the third quarter of 2016 and will continue the strategic review process for those plants.

For the first time in more than a year, we saw positive retail sales growth in the fourth quarter of 2016, and we expect modest overall load growth in 2017 as improving energy and metals prices support industrial growth and our regional economies. We benefited from warmer than normal weather in 2016, but low energy prices, a strong dollar and a weak global economy reduced overall load growth year-over-year.”

On Jan. 30, AEP did complete the sale of the four power plants mentioned for $2.1 billion. The recorded amount made from the sale after all cuts, including taxes, is set at $130 million. All of this information can be found at The website also indicates $2.3 billion in wages and approximately $13.5 million in donations provided by the company with about 37 percent of those donations going toward education initiatives. However, these numbers are given as representation of AEP as a whole. Kentucky Power is merely one unit of AEP.

Kentucky Power, on its own, has mentioned community development projects, company expenses and community outreach initiatives, such as the recent workshop in Hazard. Doug Bryant, who is a Kentucky Power customer, attended the workshop and had this to say,

“I went to two tables. One was concerning the fees, riders and taxes on our bills and the other table was looking at my power usage and possible ways to reduce. The representatives at the tables were very helpful in terms of explaining, but none of them gave any hope that the prices would change. Basically, it was up to the customers to work on ways to reduce power usage and thus reduce the bill. They will come out and do an evaluation of your home and help you pinpoint problems. For example, heat pump could be the problem or loose ducts, hot water heater or whatever else.”

Amid all of the debate, one fact that remains is the reality that power bills have risen sharply for Kentucky Power customers in Southeastern Kentucky, with some of those customers experiencing difficulty handling the sudden rise. Kentucky Power, thus far, cannot give assurance that fees and riders on customers’ bills will go away. So, Kentucky Power is trying to encourage customers to seek ways of cutting energy costs on their own through power saving practices at home. Kentucky Power says cost is the reason for higher bills. Customers in Southeastern Kentucky are suspicious that their bills are higher than those of Kentucky Power customers in other parts of the state because in other parts of the state Kentucky Power has competition, whereas no competition exists here. And, in the meantime, customers are hoping that government officials at all levels and Kentucky Power representatives can, along with the customers, have a civil and productive process regarding this issue that will quickly provide fairness and relief for the many citizens, who are struggling here in the mountains.

Sam Neace can be reached at 606-629-3243 or on Twitter @HazardHerald.

Courtesy photo | Many people are speaking out over power bills in the mountains. photo | Many people are speaking out over power bills in the mountains.

By Sam Neace

[email protected]

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