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State regulators have levied fines totaling $107,500 against two natural gas companies in Eastern Kentucky and their owner for alleged violations that include overcharging customers.
The state Public Service Commission said in a news release issued Monday that it had fined Johnson County Gas Co., B&H Gas Co., and owner Bud Rife for allegedly violating state laws or PSC orders more than 30 times.
The violations involve a failure by Johnson County Gas to adjust the amount it charges customers for natural gas service as the wholesale price of gas declined.
B&H Gas also took on more than $1.7 million in debt, in the form of promissory notes to Rife or others, without getting approval from the PSC, the agency said. The PSC regulates most utilities and would have had to sign off on that debt.
The PSC said the company failed to make quarterly adjustments to the price the company charged customers for gas. It was required to make the changes because the market price of gas fluctuates, and utilities are allowed to get paid only for actual costs. The company failed to adjust its price from mid-2013 through the first part of this year, the agency said.
The PSC said that it ordered Johnson County Gas and Rife to begin making the required quarterly changes in 2012, but the company hadn’t done so since early 2013.
The cost of gas to the company has gone down significantly since then, “indicating that Johnson County Gas is charging customers more than is justifiable,’’ the PSC said in its news release.
Rife testified the failure resulted from a number of problems, including a fire at the office, issues with secretaries and a bankruptcy, the PSC said in a release.
“The excuses offered by Mr. Rife strain credulity,” the PSC said in its order.
The agency said the failure to file the adjustments is not a new issue and that Rife had been “repeatedly chastised” by the PSC over the issue.
Rife said in an interview with the Herald-Leader that he plans to appeal the fines levied by the PSC. He said he and the companies have not done anything wrong and denied he had overcharged customers.
In a separate 2015 investigation, the PSC found that B&H gas had not adjusted its cost as required, resulting in a total overcharge to customers of $102,000 in just 18 months.
The PSC ordered the utility to refund the money to customers. It has appealed the order to court and there hasn’t been a final decision, according to the PSC.
The two companies share an address at Betsy Layne, in Floyd County. B&H Gas has 258 customers in Floyd County, while Johnson County Gas has 315 customers in Johnson County, according to the PSC.