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Residential bills to climb

This story ran in the August 2016 member newsletter titled Member Matters, which is included in monthly bill statements.  An earlier version also ran in the January member newsletter.

Reserve funds that have fully offset the 2014 rate increase for residential members are expected to phase out in coming months, beginning in October.

Members have received this credit on their bills since Feb. 1, 2014, when 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 on 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.  When the credit no longer pays for the increase, members’ bills are expected to raise about 20 percent.

“We’re pleased this reserve fund was available to absorb the rate increase for our residential members for nearly three years,” said Jeff Hohn, Kenergy President and CEO.  “Although the credit is expected to remain for a few more months, we want our members to know now the credit will end later this year so they can budget for higher bills.”

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.

The reserve funds’ lifespan is based on members’ electric usage.  The less electricity members use, for example, the longer the credit will last.