Get Ready for Both a Refund and Rate Increase Too

The Kentucky Public Service Commission has increased the rates of Big Rivers Electric Corporation (1/3 owned by Jackson Purchase Electric), but not as much as the electric company wanted.  This means the rate increase that Jackson Purchase Electric Customers started paying back in August, is going to result in a partial refund starting Tuesday. 

The PSC says they have approved an "additional $54.2 million annually from the customers," which is about $20 million (27.2%) less than the amount Big Rivers wanted.  The rate increase request was all because of the departure of the utility's largest customer, the Century Aluminum smelter in Hawesville.  The PSC says customer rates will not revert back to the rate level before August, but the rate increase will not be as much going forward.  

The PSC says customers will receive refunds, with interest, of the difference between what they paid under the proposed rates and the rates approved by the PSC on Tuesday.  How much of a refund will depend on how the amount is split between the three electric companies that own Big Rivers Electric, and that information is not yet known.

The PSC says on average, residential customers will see bills increase by about $17 a month, but the actual size of any increase "will vary depending on which distribution cooperative serves that customer."

Century Aluminum's Hawesville smelter stopped purchasing power from Big Rivers on August 20th and started buying power on the open market.  The smelter consumed about 40 percent of the power generated by Big Rivers, and a slightly larger share of total revenue. 

This rate increase, however, is only one part of a two part issue.  The PSC's decision on Tuesday only covers the first rate increase request.  Big Rivers has also asked for an additional rate increase starting in January when the Century Aluminum smelter in Sebree leaves Big Rivers.  Big Rivers is maintaining that they can't afford to lose both smelters and keep electric rates the same. 

With 40 percent less revenue coming in from the loss of the Hawesville smelter, Big Rivers says the Sebree plant accounts for about 40 percent of their remaining revenue.  The Sebree plant will leave Big Rivers in January.  The rate increase request is similar in size to the first request, but the exact amount is not immediately available. 

Back in September, Big Rivers spokesman Marty Littrel said in a story by the Evansville Courier Press, that the impact of the two proposed rate increases combined would be around 45 percent higher than the rates at the beginning of 2013. That percentage does not take into account the reduction ordered by the PSC on Tuesday.