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City responds to high power bills

Asks attorney general to look into AEP billing practices

By Jeremy D. Wells

Carter County Times

If you get your power from the city of Olive Hill, you might have noticed a big jump in your bill for February. You aren’t alone.

If you, like others, have also wondered what you’ve done to earn such an increase, the answer seems to be, “absolutely nothing.”

The problem, according to the city, is the “Power Cost Adjustment (PCA) calculation” conducted by AEP.

One local business, sharing their utility statements anonymously, showed similar electrical consumption for their December to January bill and their January to February bill – with January charges of $1,616.60 and $105.56 and February charges of $1,841.75 and $107.63 – an increase that was matched by a similar decrease in gas costs as the weather changed.

When you get to their PCA, however, the increase is nearly unbelievable, jumping from $863.97 for January to more than double that amount, at $2,145.81 for February.

Carolyn Callihan, owner of Tyler’s Pizza and wife of Olive Hill mayor Jerry Callihan, shared the bill her business received on social media, noting that the PCA has hit her business too. Tyler’s, based on the bill shared, had a PCA of $957.61 for the month of February, more than doubling their electric bill charge of $855.27 for the month.

Olive Hill city clerk Chimila Hargett said it’s an issue that has impacted every home and business in the city, and one the city is asking the state to look into.

When reached for comment on Monday, Hargett shared a statement prepared by the city relating to the issue and action being taken. That statement explained that even the city was surprised by the charges, which they were only made aware of as bills were being prepared for the month.

“The City of Olive Hill Utilities billed a PCA (price cost adjustment) of .1227 per KWH (kilowatt hour)” on their February utility bills, the release explained. “This resulted in most customers having a PCA on their bill that was higher than the regular billing line” for the month.

“The AEP estimated invoice is received on the last day of the month, just in time to complete the PCA calculation and apply it to that month’s bills,” the release continued.

The PCA, the city explained, is performed each month from an estimated invoice received from AEP for the current month and comparisons from the estimate of the prior month to the actual invoice for that month.

“This calculation is a strict formula, and is independently calculated by two employees and verified for accuracy each month,” the city explained, and applies to all customers – residential, commercial, and industrial.

The amount is supposed to “increase and decrease consistent with the changes in wholesale power costs,” according to the wording of the city’s electric utility service ordinance.

So, while it’s designed to account for ups and downs in price, no one was expecting such a steep increase over one billing cycle. The huge jump in February’s bills, Hargett explained, came from AEP’s fuel adjustment cost for December.

She said the city reached out to both the Attorney General’s office and AEP for further clarification of the charge.

In their statement to the city, the AG’s office explained, “the fuel adjustment clause is a mechanism that permits… utilities to regularly adjust the price of electricity to reflect fluctuations in the cost of fuel, or purchased power, used to supply that electricity.”
In addition to telling the city that this adjustment was based on December fuel costs, AEP insisted the rates were correct.

“The actual fuel rates for December are higher than normal due to Winter Storm Elliot,” AEP told the city. “The costs associated with Winter Storm Elliot (from December 22 – 27) equated to (approximately) 50% of the PJM costs and (approximately) 36% of the coal costs for the entire month.”

Despite this justification from AEP, the city is asking the attorney general’s office to review the billing. They told the city they will be reviewing the billing received as a part of their ongoing review of Kentucky Power’s use of the fuel adjustment clause.

The city said they have also reached out to city hall in Vanceburg, who operate on a similar contract, and found “they received the same extraordinary fuel adjustment costs on their billings.”

Mayor Callihan said with inflation and other price increases, he knows this increase has hit utility customers hard, and the city is looking at any help they can offer.

“To say the staff was shocked by the AEP bill would be an understatement,” Callihan said in a statement released by his office. “Not only for the amount that will have to be paid to AEP by the city, but that it would so dramatically affect the customers’ bills.”

While there is assistance available for energy bills from those who qualify, it can be limited.

“Our residents have already used the Community Action Agency’s funds to help with the high January bills,” the mayor continued. “We are truly concerned and looking into anything that may help.”

Contact the writer at editor@cartercountytimes.com

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