A company that supplies natural gas to homes in Floyd County overcharged customers and must cut its price and make refunds, the Kentucky Public Service Commission said in an order issued Thursday.
Bills for customers of B&H Gas Co. will go down by about two-thirds under the order, the commission said in a news release.
The company supplies gas to about 260 homes and businesses.
B&H buys gas wholesale from a company called B&S Oil and Gas Co. Both of the companies are owned by Bud Rife Jr., according to commission records.
Sign Up and Save
Get six months of free digital access to the Lexington Herald-Leader
The PSC opened an investigation in November 2015, with much of the focus on whether B&S could justify what it was charging the affiliated company for gas.
The PSC order said the two companies had resisted efforts to figure out B&S’s fully distributed cost of gas.
The companies gave inconsistent or incomplete answers to requests for information, the agency said.
The PSC fined each company and Rife $500 for failing to comply with orders to produce information.
B&H argued that its rates were reasonable and lower than other area suppliers, but the PSC said in its order that records it received don’t justify what it has been charging customers.
The company has charged more than comparable utilities and had not cut rates even as natural gas prices fell, the commission said.
Natural gas distribution utilities such as B&H cannot charge more than what the company pays for the gas. The cost of distributing the gas is calculated separately and is included in the base rate that companies receive, the PSC said.
The PSC said the price B&H paid for gas was $9.38 per 1,000 cubic feet, while the cost at 11 other small distributors was no more than $5.31.
The PSC said B&H should pay its supplier, B&S, only $5.99.
The agency said B&H had overcharged customers by a total of $101,876 since November 2015, when it opened the case, and the utility must refund that amount.
The PSC ordered the company to pay the refund over two years through a reduction of $3 per 1,000 cubic feet of gas.