The Kentucky Public Service Commission (PSC), of which I am chairman, has received nearly 200 complaints from Harlan County residents. Every one of these complaints has been or is being investigated. PSC staff also has met with KU officials in order to obtain information about the circumstances leading to the higher bills.
Let me share with you, my Harlan County friends and neighbors, what we have found thus far.
It appears that three factors have contributed to the higher January bills.
The first is simply that the weather turned sharply colder during the billing period, particularly for the many Harlan County residents who heat with electricity, colder weather means higher usage, which means a higher bill. We all expect to pay more when we use more.
The second factor is that it appears that many residents received December and November bills that recorded less than their actual electricity usage. This seems to have occurred either because their meters were not read correctly or were not read at all, with the usage estimated instead. In any case, when the meters were finally read properly for the January bills - as it seems they were - those readings reflected not only the higher usage during the billing period, but also "caught up" with usage that went unrecorded during the earlier two billing periods. That made the January bills unusually large.
Finally, the third factor was a miscalculation by KU in the bill adjustment for the cost of the fuel it uses to produce your electricity. Like every other utility that uses coal to generate electricity, KU adjusts its monthly bills to reflect the cost of coal. This adjustment (known as the fuel adjustment clause) appears as a fuel surcharge or credit on the monthly bill, depending on whether coal costs have risen or fallen relative to a benchmark level (surcharge when they are over; credit when below). The benchmark is adjusted periodically and rolled into base rates in order to minimize the monthly fluctuations in the fuel adjustment. All of these adjustments are subject to review by the PSC and are in fact reviewed regularly.
KU miscalculated the fuel adjustment clause for November. It was set artificially low, making bills received in December lower than they should have been. The error was detected and corrected in the January bill for December usage, making the increase in the fuel adjustment clause higher than it would have been had the November bill been calculated correctly.
KU is entitled to recover the fuel adjustment revenue they should have collected for November, but did not due to the calculation error. While the usual course would be to collect that revenue in one month through a higher surcharge, after meeting with PSC staff, KU agreed to spread the collection over three months in order to minimize the impact on consumers.
Our investigation has uncovered only a few isolated cases in which bills did not reflect actual electric consumption, and those bills have been adjusted. Furthermore, KU has re-read more than 600 meters in Harlan County and has visited, often accompanied by the chaplain or other officials from the Harlan County Sheriff's Office, many of the customers who complained to the PSC.
Based on the meter readings and billing histories provided to the PSC and on our staff investigation, it appears that the vast majority of the bills received in January reflect actual electric usage. As I stated above, it may be usage incurred, but not billed for, in earlier months. However, there does not appear to be any truth to the rumors that KU is deliberately overbilling its Harlan County customers.
If the unexpectedly high January bills are causing anyone financial hardship, the first step should be to contact KU to work out a payment arrangement. The utility has pledged to us that it will do all it can to accommodate those customers for whom paying these bills all at once would create difficulties.
Customers who desire additional information about this situation or who have been unable to resolve billing issues with KU should contact the PSC's Consumer Services Division, which can be reached at 800-772-4636.
Rest assured that the PSC will continue to closely monitor this situation and take whatever steps may be necessary to ensure that consumers are charged only for the services they receive.