The ‘Big Sandy Rider’ includes two costs – the money still owed on Unit 2 of the generation plant, which has been closed, and the actual closure costs of the coal ash pond at the plant and other costs, such as demolition of the old cooling tower.
The Mountain Eagle
Date: 02-01-2017 — An online petition targeting American Electric Power rates has gained more than 10,500 signatures in a little over a week.
The petition, placed on ipetitions.com, has a goal of 12,000 signatures. As of 3 p.m. Tuesday, 10,607 people had signed it.
Jeff Pennington of Hazard, a customer of AEP’s Kentucky Power operating company, started the petition. He said he started it when his residential power bill jumped to more than $700 this month for usage in December. He has already sent copies to state and U.S. senators and representatives, but is continuing to gather names.
“I’m going to leave it up till every gets to have their say,” he said.
And many are having their say on line. Among the written comments:
“My Kentucky power bill from AEP doubled this past month I am a single mom of 4, I got a $1000 electric bill. I don’t even make that much money in a month….something has to change.”
“My electric bill has jumped $200 this month and haven’t even had electric running!! Plus I have two fireplaces kept with wood burning so please tell me how my bill went up so much?! I’m on fixed income with no help from government, don’t receive food stamps or any assistance so why is it my family suffers when all I’ve done is payed in and worked all my life to be done this way????”
“Can’t afford to pay electric and still have money to feed my child.”
“My electric bill has tripled, impossible I am using a wood fireplace and kerosene too!”
Pennington said he was particularly concerned about fees that are added to the bill above the rate billing. He cited the environmental fees, the retirement of the Big Sandy Generation Plant Unit 2, and a “deferred deposit” he said could cost $500 or more per month.
Andrew Melnykovych, spokesman for Kentucky Power, said the deposit has been part of Kentucky Power’s “tariff” approved by the Public Service Commission for at least 20 years, and said the environmental fees have been in state law for 25 years.
“In order to help utilities keep burning coal, the General Assembly allowed utilities to recover the costs associated with certain environmental regulations” that required the companies to install scrubbers and other equipment on coal-burning power plants to control chemical precursors to acid rain.
The Big Sandy Generation Plant no longer burns coal, but Kentucky Power owns half of the Mitchell Power Generation Plant in West Virginia, and buys power from a coal-fired plant in Rockfort, Ind.
The “Big Sandy Rider” on bills also pays for the conversion of the plant from coal to gas, Melnykovych said.
Allison Barker, spokeswoman for Kentucky Power, said the deferred deposits are charged to customers who have had spotty payment histories with the company. The deposit is equal to twice the customer’s average monthly bill for the past year, and is split up and added to three consecutive bills. Asked how that affects customers who are already having trouble paying, Barker replied, “It allows them to continue to have power.”
Barker said the Big Sandy Rider includes two costs – the money still owed on Unit 2 of the generation plant, which has been closed, and the actual closure costs of the coal ash pond at the plant and other costs, such as demolition of the old cooling tower.
The closure costs fluctuate from month to month, she said, but the recovery cost of money still owed is $200 million split over 25 years. Customers can expect to pay it until 2040. The environmental fee is based on 50 percent of the cost of pollution controls at the Mitchell plant.
Pennington said costs such as those should be part of the “cost of doing business,” and not be passed along to customers. Melnykovych, however said by law the company can only recover direct costs of power generation through its rates, but is also entitled to a “rate of return,” or profit, for stockholders. Melnykovych said he could not say what that rate is for Kentucky Power, but said for most companies is typically in the high single percentages or low double percentages.
Pennington also questioned why the rates the rates couldn’t be lowered, considering that AEP chairman and CEO Nicholas K. Akins was paid $11.4 million annually.
According to the stock market analysis company Morning Star, AEP paid Akins and four other top executives more than $24 million in 2015, which Melnykovych said must come out of the rate of return. Kentucky Power Company’s executive and other employee salaries are paid from the rate set for expenses, Melnykovych said.
As far as the other fees, Melnykovych said if the company paid for those costs out of its rates, it would simply means higher rates for customers.
“ If it was covered through the normal cost of business, it would be recovered through the rates and customers would still be paying it through the rates,” Melnykovych said.
Pennington said he’s hoping government officials can change the way things are done.
“They have a monopoly in the area, and they can do whatever they want to do,” he said.
Pennington’s petition can be found at https:// www.ipetitions.com/petition/ aep-is-out-of-control.
He has also started a Facebook Page called “AEP Must Be Held Accountable.”
