Costly energy deals hurt ratepayers

EnvisionFranklinCounty is concerned that the Frankfort Plant Board’s contract with the Kentucky Municipal Energy Agency commits to a financially risky coal-based power supply through 2029, restricts our options and creates barriers to measures that could reduce costs for ratepayers — namely energy-efficiency and renewable-energy programs.

We agree with Annette DuPont-Ewing of the Kentucky Municipal Utilities Association that we do not want the plant board or other utility members to overpay for renewables. Our concern is that the contract locks the plant board into buying coal power that could become very costly. The report from Synapse Energy Economics detailed how such disincentives would operate within the contract.

KyMEA’s energy portfolio includes Power Purchase Agreements with two companies for baseload coal-fired generation (100 megawatts each) and one agreement for natural-gas peaking power. The gas would only be used during times of peak demand; thus most power would be produced by the coal-fired generators.

This could change after 2022, when one of the coal agreements expires, but they have the option to renew and expand it. The KyMEA might buy more natural-gas generation and there may be up to 50 MW of existing hydro in their mix, but we based our analysis on what is under contract.

We have grave concerns about the agreement for 100 MW of coal-fired generation from Big Rivers Electric Corp., which lasts until 2029. Big Rivers has a history of financial and management troubles and the highest rate of carbon emissions of any utility in the country.

With the many changes underway in the electricity sector, the falling price of natural gas and renewables, and the numerous environmental regulations affecting coal generation, committing to a 10-year contract for coal power is financially risky.

Our concerns about the Big Rivers agreement were heightened when we learned that it was heavily redacted, to the extent that we were unable to learn basic information about it. Thus we were surprised when DuPont-Ewing claimed that, “there are no requirements for minimum amounts of coal-fired energy purchases.” Has the KyMEA shared these confidential documents with her and, if so, why have ratepayers not been able to see them?

Contrary to the claim that KyMEA would bring electricity decision-making back to local communities, we see the opposite occurring. The contract was presented to the plant board in July and voted on in August. There was no public process to analyze and discuss it and it was not available to the public before it was voted on. When we asked the board to allow a few more weeks to evaluate it, our request was denied and the contract approved 3 to 2.

DuPont-Ewing implies that the Public Service Commission evaluated the impact of the Big Rivers contract on KyMEA’s customers. This is not the case. According to the PSC’s director of communications, “The PSC has no jurisdiction over KMEA or its members, so the impact on retail rates within KMEA is not material. The PSC will be reviewing the contracts to determine whether they benefit Big Rivers and its members.”

The PSC is not looking out for the ratepayers, thus we depend on the good judgment of our appointed board members and the attention of concerned citizens.

This story was originally published December 16, 2016 at 3:32 PM with the headline "Costly energy deals hurt ratepayers."