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Hearings on power rate increases in Eastern Ky. start tonight

PIKEVILLE — After a week without electricity in December, Kentucky Power customers' ire lit up like their Christmas trees should have.

At least two counties considered suing the company for negligence in clearing power line rights of way before a foot of snow fell Dec. 20. Public meetings were held. Counties spent thousands of dollars opening shelters.

The largest outage in Kentucky Power's history made the company's request for a 24 percent rate increase seem like a bad joke. If the state Public Service Commission approves the rate increase, the company expects customers' monthly bills to rise about 33 percent, from an average $115 to an average $153.Public hearings about the rate increase are scheduled this week and next in Ashland, Pikeville and Hazard. Local officials expect the hearings to be well-attended.

"It was regrettable timing," company spokesman Ronn Robinson acknowledged in an interview. But it was timing that couldn't be helped, he said.

The "test year" for assessing annual costs ended Sept. 30, and the company had 90 days to file for a rate increase. A foot of snow fell on the weekend before Christmas, and downed trees, snow-laden power poles and frozen equipment took out power to about 80,000 people, about half the company's customers in 20 Eastern Kentucky counties.

Kentucky Power filed its rate increase application Dec. 29 — the same day it got the last of its customers reconnected.

The timing of the request is not the only issue. Industrial power company customers and non-profit organizations that aid low-income residents have moved to intervene in the case.

Hazard Perry County Community Ministries estimated that it served 100 people with $5,000 paid toward Kentucky Power bill assistance.

"With the proposed rate increase, it is estimated that the number of people requesting assistance will double," the group said in its motion to intervene.

The Kentucky Industrial Utility Customers intervened on behalf of AK Steel, Marathon and others.

Morgan Reynolds, a retired telephone lineman in Letcher County, said outages happen two or three times a year at his home in Millstone, and it's clear to the people in his neighborhood that the power company should move its poles and lines to higher ground or come out and trim trees.

"To the best of my knowledge, we were out six days," Reynolds said. "There was one big pine that fell across the line."

He said the phone, cable and power lines should share poles instead of coming up different routes. And, he said, the rate increase is too high.

"Once they put a pole in, they won't hardly come out and move it," Reynolds said.

In some cases, power outages were prevented: Kentucky Power cleared lines surrounding Wheelwright a couple of years ago, said Mayor David Sammons. And city employees cleared debris that threatened lines during the storm in December. Customers within the tiny Floyd County city didn't lose power, Sammons said.

Robinson said Kentucky Power spends millions of dollars a year on maintaining 9,900 miles of lines. During the December outages, the company had to fix 204 broken poles and cross arms, 150 transformers and 4,100 spans of wire, often on difficult hilly terrain in snow and ice. Months later, the company was still cleaning up some damage, Robinson said.

That wasn't enough to satisfy some elected officials. Pike County Judge-Executive Wayne T. Rutherford and the fiscal court directed the county attorney to explore the feasibility of a lawsuit.

"Many times when we have a disaster, we hear, 'This is an act of God, it is nobody's fault.' This time that is not the case," Rutherford wrote to the state Public Service Commission on Jan. 8. "What happened this time was pure neglect by American Electric Power/Kentucky Power." American Electric is Kentucky Power's parent company.

The county decided in March not to sue, a spokesman for the judge-executive said.

Letcher County Attorney Harold Bolling said most customers' anger was because of damage to appliances and lost food. There's no mechanism for the company to replace property, Bolling said.

He said Letcher officials directed him to explore joining with Pike County in a lawsuit to recover the cost of providing shelter, food and heating oil to displaced or stranded people, based on the idea that Kentucky Power should have maintained line rights of way. But the complex nature of determining who's at fault when a tree takes down a line makes a lawsuit daunting and expensive, Bolling said.

"There's all sorts of logistical issues," he said.

The expense of repairing lines and restoring power is passed along to customers anyway. Costs associated with cleanup after 2008 and 2009 ice and wind storms are included in the rate increase request, Robinson said.

Reynolds, the former telephone lineman, said he thinks the company will take the least expensive route.

"I've heard our people say it's cheaper to repair it than it is to maintain it," he said.

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