FRANKFORT, Ky. (LEX 18) — State regulators are investigating how to ease volatile fuel costs passed onto consumers that are leading to higher-than-normal electric bills for customers in Kentucky.
People living in Eastern Kentucky have been struggling with high power bills in recent months.
Long-time residents Della and Gary Tomlin say it was not the case when they moved to Pike County and built their home in the 1980s. Her whole family helped out.
“We saved up to where we could start building ourself," said Tomlin. “A lot of good memories."
Tomlin started noticing a big difference after a rate hike in January 2021. Then she started to see more add-on costs on her Kentucky Power itemized bill.
"It's ridiculous, you know, how's people gonna make it,” said Tomlin.
She and her husband are on a fixed income and rely on social security and disability benefits to pay their expenses, similar to many families in the area.
Kentucky Power is the only utility company in the region.
They are on the average monthly payment program. Their bill for January was still $607.69.
“We don't owe nothing on it but yet we're struggling to keep it because we can't afford the bills"
Melissa and Robbie Justice live just down the street from the Tomlin’s. They say bills have been impossible to keep up with despite doing everything they can think of to conserve energy.
"If there are not any changes made and all these prices keep going up, people on fixed income are not going to be able to make it," said Melissa Justice.
People in the eastern region of Kentucky pay the most for their electricity bills, according to the Energy and Environment Cabinet's Kentucky Energy Affordability.
Boyd and Pike counties were the most expensive in the state.
In 2019, Pike County had a below-poverty level of 24.9%. Boyd County’s was 18.9% .
Why?
The Mountain Association is a non-profit that works to invest in people and places in Eastern Kentucky to help transition the region in various industries like energy efficiency.
Energy manager Josh Bills has led their charge to help tackle the problem of high energy bills in Eastern Kentucky.
Bills says there are many factors contributing to customers' bills like poor energy efficiency, greater demand in the winter and summer, and the fluctuating cost of fuel.
“What comes to mind first and foremost is fuel adjustment cost. The cost of fuel from month to month,” said Bills.
A 1977 Public Service Commission regulation allowed utility companies to pass fuel costs on to customers.
“That means that utilities are passing on their cost in real time, quote, unquote, almost real time, you know, month or two lag, to customers as opposed to, you know, generation or two ago, they would have to deal with those changes in cost of fuel month to month on their own and figure out how to minimize the impacts of that to their bottom line until they saw a real need to go through the full-blown process of applying for a rate adjustment, which can be really costly for them,” said Bills.
The Mountain Association is among the nonprofit organizations intervening in the case on behalf of ratepayers. Bills said he’d like to see regulators address the uncertainty the charges create for ratepayers when they get their monthly bills.
Bills says fuel costs are also higher in the winter and summer when there’s more demand from people looking to heat and cool their homes.
“The more electricity that there is demanded, the higher the cost for that natural gas. It's just supply and demand,” said Bills. “We can see swings in our electric bill of a couple hundred to five, six, seven hundred dollars on a winter month from one month to the next just depending on how cold it is and that’s hard for somebody on a fixed income to be able to manage.”
What’s Next?
Kentucky Public Service Commission initiated an investigation into Fuel Adjustment Clause Regulation 807 KAR 5:056, purchased power costs, and related cost recovery mechanisms in November. It was requested by the Kentucky Senate after receiving a host of complaints, primarily in Eastern Kentucky.
They asked all utility companies in the state to answer targeted questions to help with their investigation.
The Mountain Association joined with several other organizations and submitted their suggestions on behalf of customers.
The deadline for submission passed. The commission has not released its findings yet.
Bills hopes they will decide on recommending more investment for making efficiency improvements to inefficient homes.
There is bipartisan legislation circling in the Kentucky House to create winter and summer temperature standards to protect people from disconnection of service for electricity and gas. It has not yet been brought to the floor for a vote.
Kentucky Power
Federal regulators paused the potential sale of Kentucky Power to a Canadian-based company last year.
In their filing to the Public Service Commission, the company described their rates as “just, reasonable and fair.”
A spokesperson from the company echoed those sentiments in a written statement to LEX 18 on Friday:
“We want our customers to know that Kentucky Power rates have not changed – meaning they have not gone up – since the last rate case two years ago on January 14, 2021.
During the winter months, customers typically see an increase in their power bill. This is due to increased usage usually caused by decreased temperatures. With the arctic temperatures eastern Kentucky experienced a few weeks ago, most customers used more electricity than they would have normally used. Month-to-month usage is listed on customer bills for their knowledge. This fact, coupled with the volatile cost of fuel used to create the electricity customers are using, can cause high winter bills. Fuel costs are passed through to the customer based on their own usage and collected dollar-for-dollar. Kentucky Power does not benefit from fuel costs. Just as everyone is seeing the increase in costs for other necessities, such as food and other household needs, fuel costs are also affected by inflation.”
The company added that they assist their customers by working with them one-on-one to help them decide on payment plans and have a list of resources available:
Heart and Thaw: View News Release (kentuckypower.com)
Average Monthly Payment Plan: Average Monthly Payments (kentuckypower.com)
Energy Saving Tips: Save Energy (kentuckypower.com)
Even after the investigation, it'll take months for customers to see any changes.
In the meantime, the Tomlins and the Justices literally can't afford to wait
"They worked on it long enough. It’s time for action,” said Robbie Justice.
Tomlin says they don’t get enough help and are still on the hook for paying those bills. Regardless of what happens, she says she plans to stay in her home.
"I'll sit here and freeze to death, starve to death, whatever," she said.
