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Wed January 30, 2013
Big Rivers Electric Customers Can Expect Rate Increases
Big Rivers Electric customers in western Kentucky can expect a marginal increase in their rates soon but a much larger increase could be coming their way in July. The Kentucky Public Service Commission reaffirmed a 2011 decision that decreased subsidies for two aluminum smelters, fixed a $450,000 mathematical error and added legal costs, which adds 45 cents to the average customer’s bill.
But PSC spokesperson Andrew Melnykovych says Big Rivers heavily relies on the two smelters for more than half its revenue, which hurts them since one of them plans to close in August.
"They have got a very atypical load profile for a utility where they’ve got two customers that account for about 70 percent of their load and that’s pretty unusual," he says.
The Century Aluminum smelter that is expected to close in August accounts for 40 percent of Big Rivers’ revenue. Big Rivers filed for a rate increase with the PSC in mid January that would increase rates on it's more than 100,000 residential customers’ by more than $20 a month. Melnykovych says Big Rivers can only reduce its generating capacity so much to reduce costs and make up for the loss.
"But there are other costs that they’re going to incur in any case and won’t have the revenue to offset them so they say they need to raise the revenue from their other customers in order to make up for the loss of that revenue from Century.," he says.
Melnykovych says the PSC has until November to make its decision. But the utility can increase rates starting in July. They will just have to refund its customers with interest if the PSC decides on a smaller increase. Big Rivers is also considering closing some of its plants to adjust for the loss.