The Kentucky Public Service Commission has selected a consulting firm to audit the management of Big Rivers Electric Corporation after the company lost two of its largest customers.
Massachusetts-based Concentric Energy Advisers will begin the focused management audit later this month.
Last year, aluminum smelters in Sebree and Hawesville left Big Rivers to buy power on the free market.
Together, those contracts accounted for $360 million a year or two-thirds of Big Rivers’ revenue.
Since then, the PSC approved rate increases for Big Rivers customers in an effort to keep the non-profit cooperative financially stable.
A management audit was a condition of the most recent increase in April.
Under the audit process set forth in state law, the PSC selected the independent consultant. Big Rivers will pay for the audit, which will cost no more than $336,700.
In ordering the audit, the PSC said the major focus “will be on the steps that Big Rivers has undertaken or should undertake to mitigate any further financial impact” from the loss of the smelters, as well as “the strategic planning, management and decision-making of Big Rivers relating to its mitigation efforts.”
The review will examine options, including the sale of unnecessary power plants and selling surplus power outside its system.
Concentric Energy Advisors is expected to gather information from Big Rivers and from many of the parties that participated in the recent rate cases.
Big Rivers is owned by three distribution cooperatives, providing power to about 112,000 customers in 26 western Kentucky counties. The customers include about 20 large industrial facilities.
The PSC expects the audit to be completed by next spring.
