a state law called the Little TVA Act and EPB’s contract with the TVA mean that TVA ultimately regulates and approves all rates and rate structures for EPB.

Congressmen have not received AG letter concerning GEPB rates

  • BY MELINDA J. OVERSTREET moverstreet@glasgowdailytimes.com
  • Aug 11, 2016

EPB rate protestors at Rand Paul meeting

GLASGOW — Spokespersons for U.S. Rep. Brett Guthrie and U.S. Sen. Mitch McConnell said Thursday that their respective offices had not, to the best of their knowledge, received a letter from Kentucky’s attorney general regarding the Glasgow Electric Plant Board’s electricity rate structure.

U.S. Sen. Rand Paul was in Glasgow on Tuesday for an open meeting with constituents and heard about the letter from audience members. He said his office would serve as an advocate in the sense of connecting local residents to others in the federal government who could help.

A letter addressed to the trio in the commonwealth’s congressional delegation from Attorney General Andy Beshear was provided to some local residents last Friday and made its way to the Daily Times as well, but it had Monday’s date on it. It was unclear as to when it was actually mailed to the intended recipients.

EPB’s rate structure went into effect Jan. 1. It includes a customer charge for EPB’s cost of delivering the power it purchases wholesale from the Tennessee Valley Authority. For the power itself, EPB passes along its wholesale cost from TVA in like manner — with different rates for peak and off-peak hours, with relatively little difference between those two, and a coincident peak demand charge. The summer rate for the coincident peak — the one hour during each month when demand is the highest — is $11 per kilowatt, and it’s slightly less than that in the winter.

Although EPB uses weather forecasts to try to anticipate when that hour may be and issues alerts using multiple modes of communication, it’s impossible to know until the month is done which hour is the one that will bear that cost. Typically, a window of a few hours is provided if a possible CPD could occur on a particular day, but with recent weather patterns, that has happened on multiple days in a row. EPB has also suggested that consumers should just not use any unnecessary electricity during those hours and adjust their thermostats up approximately 4 degrees, but customers have complained that no matter what precautions they take, it still seems their bills jump considerably due to that one charge.

Beshear’s letter said the rate structure penalizes people who are unable to be flexible with their electricity consumption, such as elderly and disabled persons, and/or ones who can’t afford newer, more energy-efficient appliances.

“Most regulators and consumer advocates view residential demand charges as a blunt instrument, described as a ‘gotcha’ rate with unpleasant surprise impacts,” the letter says, noting that in most cases where such a rate structure has been incorporated, it has been only for large commercial/industrial customers.

The Office of the Attorney General’s Office of Rate Intervention has some regulatory authority over municipally owned utilities, but Beshear recognizes in the letter that a state law called the Little TVA Act and EPB’s contract with the TVA mean that TVA ultimately regulates and approves all rates and rate structures for EPB. The Office of Rate Intervention, upon the OAG’s receipt of numerous significant complaints from local customers, initiated a dialogue with TVA, a federal agency, to try to find a suitable resolution, but the letter asks McConnell, Paul and Guthrie to get involved as well.

“As the regulator, TVA is uniquely positioned to recommend and approve modifications to the rate schedule and help alleviate the unfair burden imposed upon the Glasgow residents,” Beshear’s letter says.

In the interim of the congressional delegation’s receiving the letter, Jim Hopson, manager of public relations for TVA, has responded to some of the specific concerns raised in the document.

He said last week that TVA would welcome a dialogue with federal, state and local officials.

“In our role as regulator, TVA works with local power companies to ensure power is provided to consumers in a nondiscriminatory manner at rates as low as feasible,” Hopson said. “We also have a responsibility to listen to the concerns of consumers as well as the officials and agencies who represent them. Electric bills affect everyone, from families to large businesses, and we care about all those who call the Valley home.”

He has noted, however, that it is not TVA’s role to tell local utilities how to design their rates, only to ensure that they use “industry standards” in calculating the bills and that they are fair and equitable.

The Daily Times asked whether any of the other 153 local power companies in a total of seven states to which TVA sells power use similar methods that are based on that one-hour peak demand.

“The rate structure GEPB implemented charges each customer his or her contribution to Glasgow’s peak demand, which is billed to GEPB by TVA,” Hopson responded. “Although this is unique among residential customers within the Valley, there are approximately 10 local power companies that have implemented this same structure for their large commercial and industrial customers.”

Although different classes of customers may be distinguished, such as residential and commercial, and even categories such as sizes of commercial businesses, once you have defined those classes, you can’t treat people within those classes differently, Hopson said.

Beshear’s letter says that, based on correspondence between TVA and EPB, TVA “had reservations about the rate structure prior to approving it.”

The Daily Times asked TVA: “If TVA had reservations before approving the rates, what specifically changed your minds that allowed EPB to proceed?”

Hopson replied that TVA had multiple discussions with EPB over several years prior to approval of EPB’s requested rate structure changes.

“A primary focus of those discussions was to ensure that GEPB accurately determined the costs associated with the new rate design and assessed how those costs would be passed on to consumers. TVA respects local decision-making regarding the timing and implementation of such changes,” Hopson said. “When TVA approved the proposal, the decision was based on conversations GEPB had with their community, their extensive multimedia and educational outreach program, inclusion of TVA’s requested changes and the fact the proposal fairly and equitably shared costs among all consumers.”

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