Paducah Power general manager David Clark introduced Interim CEO and Chairman of the Board Marc Gerken, Chief Operating Officer Randy Short, and Senior Vice President of Mining Paul Krivokuca. They each helped with a slide presentation showing the progress made by Prairie State Energy Campus over the last two years, and gave forecasts for how the plant should operate over the next decade. Regarding the plant, Gerken says this summer the plant has been operating at a capacity factor of nearly 74 percent, which is a significant improvement over the July 2013 capacity factor of 43 percent. The capacity factor is a measure of the plant’s productivity. Gerken said, "This is nothing that we are proud of, but it’s a measurement of where it [the plant] is today." The goal is to bring the plant to a capacity factor of 85 or higher which, according to Clark, would lead to the reducing of the PCA showing up on bills to zero or close to it.
Gerken added, "I wouldn’t be here today if we didn’t think we could meet those goals, and Krivokuca says, "We believe we have built the best [plant] in the county, and we are going to hold to that."
Paducah Power System's Power Cost Adjustment is an added fee for customers, which is set by the utility. Its rate change is based on several factors, one of which is the varying amount of electricity that must be purchased from outside sources because the Prairie State Campus is not operating at the break-even level of production. Changes in the PCA have recently caused customers' bills to spike over the last year.
Rick Soderholm of Leidos Engineering, formerly R.W. Beck, Inc., has been involved with Prairie State since very early on in its development, reassured everyone that a PCA of zero is still the goal, and it's attainable. "I don't have any projections for you as to how low we think your rates could go, or when, but I'm very certain that you're at the top of the crest. Will that power cost ever go away or go all the way down to zero? That's the goal. That's what everybody is working for. We think it's achievable," Soderholm said. He added that eventually, the lower cost of on-site coal, newer equipment, and current compliance with future EPA rules will make Paducah Power's costs much lower than TVA or other utilities.
Unfortunately for Soderholm and the others, the mayor, commissioners and rate payers want a solution now.
Referring to those energy production cost comparisons, Kaler pointed out that Paducah's cost-per-household is significantly higher than other companies with much larger customer bases, especially for debt service. When Soderholm said Prairie State's costs were significantly lower than TVA and other companies, Kaler said, "I used to tell my daughter, 'I don't care what your friends are doing, I only care what you're doing,' and that's the way I feel about our situation here in Paducah. I don't care what TVA is doing, I only care what's happening here in Paducah to our ratepayers, and you all have to be held accountable."
Everyone on the commission posed questions to the five men, several of them trying to find out who promised the plant would be up to speed by now, and if there was accountability for that promise. When asked by Richard Abraham and Sandra Wilson, Clark eventually said Peabody Coal marketed the plan to the board and city leaders, but nobody from that company was present. Peabody was a major player early on, but eventually sold most of its shares, and has been under investigation by the Security Exchange Commission.
When asked if the plant's power availability factor could be more than 85 percent, Clark had to ask Prairie State's leaders if it was possible, and they said it was not typical.
Commissioner Carol Gault asked if Paducah Power had implemented any cost-cutting measures, and Clark said they have, including less sponsorship of community events, less travel for training, and cutting overtime for workers. But he said they could eliminate all payroll and office expenses and not make much of a dent. "These things are drops in the bucket, folks, when you've gotta look at the cost of wholesale power. That's just the nature of the beast," Clark said.
Commissioner Allan Rhodes was one of several who asked about the contract Kentucky Municipal Power Agency (Paducah and Princeton's Electric Plant Boards) signed, wondering why some partners only paid for power they used, but others paid for Prairie State's start-up, while getting power. Gerken said every power company's contract is unique based on its needs.
Several people made public comments at the meeting: Gayle Frye, former city employee and current business owner - "When I listened to you, I felt like I was listening to a philandering husband or wife who had been caught cheating. You say, 'I believe we can, we're really gonna try,' but Mayor, we don't have any way to prod these people to do something about these rates. I feel like we're helpless. Where is the penalty?"
Mark Bryant, resident and local attorney - "I have received information that Paducah Power has $32 million in assets and about $600 million in debt. Why don't we immediately bankrupt this company and start getting our rates down quickly?
Jay Campbell, PPS customer- "Of everyone in the world who might be able to guess where that PCA is gonna go, you guys are probably the most qualified to know that, so could you maybe guess for us? How good could it get? What's the upside? Somebody please tell me something. Lie to me. Tell me something..." (David Clark responds - "The only thing I can say is the upside is gonna be better than it is now.") Campbell - "Well, OK, that shouldn't be too hard."
Jeff Parsley, local resident and former TVA employee - "We decided we wanted to risk $600 million of the ratepayer's money in issuing bonds so we could be competitive with what we already had. I just wanted to make sure that I understood that. In the words of Abraham Lincoln, a lot of your facts were right, but just your conclusion was wrong."
Vicki Holland, local nurse - "I worked three jobs last winter because I had a power bill of $900. My mortgage is nearly $1,000, so with two bills, I paid nearly $2,000. I'm a single mother with two children, and I'm gonna tell you what I'm gonna do. Since y'all don't have a plan, if I lose my house, if me and my children have to go move in with my parents, I will seek a lawyer, and I will sue."
Jeff Parker, residential and business customer - "Who would buy a house or a business that's on Paducah Power and have jacked up rates that you can't afford to move into?"
Ronald Ward, who first came to the commission this spring to raise the issue - "Between now and 2038 on the peaking plant alone, they've go interest and principal due of $273 million dollars. Irregardless of what the rates are gonna be, the debt load is going to kill them."
Jeff Hines, former Judge - "The city, your power bill last year was somewhere in the neighborhood of $1.7 million, for the city of Paducah, and now they're gonna increase it by a third. Who's paying for it? Me, and everyone else in this room, the taxpayers. The only thing I have to say is I don't think Mr. Peabody's coal train stopped in Muhlenberg County, I think it rolled through McCracken and took us to the cleaners, is what I think."
One unidentified man asked why customers should endure the high electric rates for up to four more years, when Paducah Power is quick to disconnect service when a bill is delinquent. When he asked how long he could be delinquent, a representative said power is not cut when the bill is less than $50. The man wondered out loud if anyone actually had a bill under that amount right now.
At the end of the comments, Mayor Kaler talked about her electric bill, too, and said, "We all understand what's going on here, It's probably the most serious problem for Paducah since the great flood."
Later in the meeting, the Paducah Board of Commissioners approved a resolution demanding the Electric Plant Board, the governing body of Paducah Power System, to do the following:
· Hire an independent expert to investigate the information on which the decision to invest in the Prairie State campus was made;
· Hire an expert in utility matters to investigate current financial obligations;
· Promptly proceed with the process currently underway to hire a search firm to assist in the recruitment and selection of a successor to the retiring Paducah Power System general manager;
· Enhance and communicate to the public attainable programs to help customers with current bills created from the recent Power Cost Adjustment (PCA); and
· Consider and provide opportunities for the community to become a full and open partner in determining the fate of our community and Paducah Power System.
At yesterday’s Electric Plant Board meeting, the board approved steps to investigate current fiscal obligations, look at cost cutting measures, and conduct a process to select a new general manager. Chairman of the Board Ray McLennan resigned, first as board chairman, then from the board entirely. Vice Chair Hardy Roberts was appointed interim chairman. After the meeting, Roberts was asked if Clark's resignation would help, since some people have been calling for him to quit before he is set to retire within the next year. "I think we're gonna need David in the next three months to run the power system. He isn't gonna make or break anything as far as the cost of power. I may not disagree with his decision if he did, but still, he knows how to run a distribution system," Roberts said.
Other highlights from the meeting:
•Mayor Gayle Kaler presented a proclamation to Sarah Wilson-Kraft proclaiming September as Hydrocephalus Awareness Month. Hydrocephalus occurs when excess fluid builds up on the brain.
•Mayor Kaler presented a proclamation to Samantha Williams, WKCTC Director of Adult Learning Centers, proclaiming this week as Adult Education Week.
•William Baxter reappointed to the Board of Adjustment.
•Municipal order approved to apply for the Paula Nye Memorial Education Grant for Bicyclist and Pedestrian Safety. The grant request is for $5000 which if awarded would be used to create an after school program through the Parks Department to educate children on bike safety and the importance of physical activity. No local match is required.
•Ordinance approved to renew the local jurisdiction HVAC program agreement between the City of Paducah and the State Department of Housing, Buildings and Construction. This is a contract that is up for renewal every three years.
•Ordinance approved for change order #4 with Bluegrass Uniforms for the Paducah Fire Department. This change order adds items that were not previously incorporated into the contract or have been changed due to product discontinuations.
•Ordinance approved for a contract between the City of Paducah and the Paducah Junior College, Inc. with the City providing $125,000 for this fiscal year for the Community Scholarship Program. The program guarantees any Paducah or McCracken County student a scholarship for up to 60 hours of college credit at West Kentucky Community & Technical College provided that they enroll in the program in 8th grade and meet a set of behavior and academic standards.
•Ordinance approved for a contract between the City of Paducah and Barkley Regional Airport with the City providing $136,430 for this fiscal year to assist with general aviation and air carrier services.
•Ordinance tabled that would amend Section 2-442 of the Paducah Code of Ordinances governing the Paducah-McCracken County Riverport Authority stating that all members shall reside within McCracken County.
