Reserve funds that have been applied to fully offset a 2014 increase in Kenergy’s wholesale power costs to the co-op’s 19 industrial members is expected to end in August. The fund’s depletion will end a credit on Kenergy bills this class has received since Feb. 1, 2014.
Business members should expect their credits to end at the same time.
Earlier projections had the reserve fund drying up in July.
“We are pleased the credits are expected to remain intact until August,” said David Hamilton, Vice President of Member Services. “We’re sure our commercial and industrial members will be pleased with this additional assistance.”
Last year, the Kentucky Public Service Commission (PSC) adjusted the revenue and rates of Big Rivers Electric Corp. — Kenergy’s wholesale energy supplier — to reflect the departure from Big Rivers’ system of the Century Aluminum smelter in Sebree.
The Sebree smelter stopped purchasing power from Big Rivers on Jan. 31, 2014, the effective date of a contract allowing the smelter to buy electricity from Kenergy through a power supply from the open market.
In its ruling, the PSC allowed Big Rivers to use reserve funds to offset the increase that was passed through to Kenergy members.
Schools, farms and churches were excluded from the commercial and industrial class. Those groups are expected to receive offsetting credits until mid-2016.
In addition, residential members will continue to receive the credit on their bills until mid-2016.
However, nonresidential buildings, such as unattached garages, workshops and pump houses that are owned by residential members, will lose their credit along with commercial and industrial members.
Big Rivers’ reserve funds were established in 2009 as part of a complex transaction under which the utility regained operating control of its power plants, which had been leased to a third party when Big Rivers went through a bankruptcy proceeding in the mid-1990s.
The funds were established for the purpose of reducing the impact of fuel and environmental cost increases.