The latest casualty of the state's financial straits was seen at the Public Service Commission hearing on Tuesday on Kentucky Power's request for a rate increase.
The state's consumers are always represented at the proceedings by the state attorney general's Office of Rate Intervention. As part of that representation, the office hires outside consultants to analyze the complex rate requests and determine whether utilities need as much as they request.
But the rate intervention office was out of money, and no consultant's analysis could be purchased for Kentucky Power.
Attorney General Jack Conway had warned legislators of such an occurrence earlier this year.
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He noted the Office of Rate Intervention's staff has fallen from 13 in 1996 to five. The attorney general's overall budget has been cut by 27 percent. By January, the Office of Rate Intervention had already committed its funding for expert witnesses for this fiscal year, which ends in June.
"When we do not provide evidence through expert testimony, then the evidentiary record, which will serve as the basis for the commission's decision, will consist largely, if not entirely, of evidence supplied by the utility," Conway wrote.
The Office of Rate Intervention has come up with a solution, said spokeswoman Shelley Catharine Johnson, but it didn't result in experts for the Kentucky Power case.
Going forward, the office's expert-witness fees from current cases will not be billed or processed until the next fiscal year, which begins in July. The office also decided against expert witnesses in cases where other intervenors were hiring experts. In the case of Kentucky Power, expert testimony was offered by intervenors including the Kentucky Industrial Utility Customers organization.
"The lack of funding definitely hurts consumers. It would be good if the attorney general was able to supplement their attorneys with experts, but the budget realities are what they are," said Mike Kurtz, an attorney who represents KIUC.
Kurtz complimented the office's attorneys, saying they do "an excellent job protecting ratepayer interest" but noted that a lot of the utility matters "involve complex financial and accounting and engineering issues that the lawyers can handle but where experts would be appropriate."
Other organizations also rely on the attorney general's effort and experts.
Among them is the non-profit Community Action Council, which looks out for the needs of low-income consumers.
Jack Burch, executive director of the Community Action Council, said that despite the funding problem, "I've not seen the attorney general's office backing off either in the quality of the briefs they file or the testimony they provide."
The PSC staff conducts its analysis of each rate request but, as spokesman Andrew Melnykovych pointed out, the PSC's role is not to represent consumers.
"The attorney general's analysis and PSC staff's analysis are sometimes in accord with each other and sometimes not," he said. "The PSC, as the regulatory agency, has to balance competing interests, so the attorney general's role is more of an advocacy role, and ours is more of an adjudicative role in this matter."