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Friday, Oct. 16, 2009

State rejects electric cooperative's request for new headquarters

The South Kentucky Rural Electric Cooperative Corp., based in Somerset, has been denied permission to build an $18.1 million headquarters.

The state Public Service Commission denied a certificate of convenience and necessity for the project. The commission acknowledged that the cooperative has outgrown its current offices, built in 1952, but said the cooperative's proposal didn't justify the size or cost to customers.

The proposed office and service facility dwarfs that of similar-size electric cooperatives, the PSC said.

The commission hasn't "in recent memory" denied a power company's application for a certificate of convenience and necessity, PSC spokesman Andrew Melnykovych said.

"South Kentucky should have been more sensitive to the cost of the headquarters project, particularly given the fact that it had already expended $6.72 million in constructing three new district office buildings within the last three years" in Albany, Russell Springs and Whitley City, the commission said in its rejection letter.

The electric co-op serves 11 counties in Kentucky and two in Tennessee, reaching about 44,000 customers with 122 employees at the end of 2007, according to a needs assessment done in 2008.

The co-op is growing. It expects to have more than 56,000 customers and 160 employees by 2022. The co-op recently acquired some Monticello Electric Plant property.

Inconsistencies between the 2008 needs assessment and a similar 2002 assessment that estimated lower growth rates were part of the reason for the PSC's rejection of the application. The proposed facility would have been bigger than recommended in the 2008 assessment, the PSC said.

Building the facility would have required an electricity rate increase by 2011, a year earlier than expected, the PSC said in its rejection letter.

South Kentucky RECC officers "have not had a chance to go through it with a fine tooth comb," said Joy Bullock, corporate communications coordinator. But the cooperative plans to file a notice of intent to revise the application, she said.

"We feel the revised application will clear up any inconsistencies or miscommunications perceived by the commission regarding new headquarters facilities in Somerset," Bullock said, reading a statement from South Kentucky RECC president and CEO Allen Anderson.