I write on behalf of the approximately 1,500 members of the Bluegrass Group of the Sierra Club. We strongly oppose the latest proposal from Kentucky Utilities to drastically increase the fixed customer charge for electricity — the monthly fee that KU charges its customers just for being a customer, independent of their energy use.
KU has filed a rate case with the Public Service Commission seeking to raise that basic service charge to residential customers from $10.75 per month to $22 per month — a greater than 100 percent increase overnight.
KU’s proposal would transfer costs from high-energy users to low-energy users, would discourage energy efficiency and the use of clean energy, and would disproportionally impact the financially disadvantaged and those living on a fixed income.
This anti-consumer proposal not only seeks to hike company profits at the expense of Kentucky households, but also rewards energy waste while penalizing those who work hard to be efficient or to generate their own energy.
Lower-income customers tend to use less energy and therefore stand to lose more under a rate structure that more than doubles fixed monthly charges.
Under KU’s proposal, a home using 500 killowatt-hour/month would be hit with a whopping 17 percent higher bill; while a home using 1,500 kwh/ month would see only a four-percent increase.
Jonathan Wallach of Resource Insight, a consultant with decades of expertise in the electric power sector, has found that low-energy users are already subsidizing high-energy users under the current KU rate structure. The increase in base rates would add insult to injury by dramatically escalating the existing unfair subsidy.
We further oppose the increase in the base rate because it would also undermine progress toward energy efficiency. Wallach estimates that KU’s plan would result in an approximately 3 percent increase in energy consumption due to the disincentive for efficiency built into KU’s request.
Thus, the hiked customer charge would increase energy waste and counter more than 15 years of work by utilities to reduce energy consumption. This would stymie efficiency efforts in our state just when they are urgently needed.
For decades now, the Public Service Commission has argued for energy efficiency. Approving this increase in base rates would be a serious blow to this goal. An increase in the fixed customer charge would also set back efforts to diversify our energy sources.
Currently, the solar industry employs at least twice as many people as the coal industry. In 2016, the rate of increase in solar industry jobs was more than 17 times the rate in the rest of the economy.
Unfortunately, Kentucky’s share in this economic boom has been severely limited due to an unfortunate absence in our state of the incentives that are benefiting job growth as well as clean, affordable energy in other states.
KU’s proposal is another obstacle in the path of solar and other sustainable technologies because Kentuckians who adopt cleaner energy sources, such as solar panels, while remaining connected to the grid would suddenly see a great decline in cost savings due to the large increase in fixed monthly charges.
It is clear that KU’s rate restructuring proposal would hurt fixed-income customers, discourage energy efficiency, and inhibit customers from investing in clean, cost-saving technology like rooftop solar installations.
Several organizations and individuals, including the Community Action Council and the Kentucky attorney general, have joined with the Sierra Club to oppose KU’s rate restructuring request.
The Public Service Commission has scheduled a meeting on April 18 in Lexington, at 5:30 pm in the Lexington Public Library, to obtain feedback from the public. We need to make it known loud and clear that we oppose KU’s proposal.
Dick Shore is chair of the Bluegrass Group, The Sierra Club.
Related: Herald-Leader article, “Public Service Commission sets public meetings in utility rate case“