Paducah Power System officials continued a rate review process Monday which will help determine any electric rate changes that would go into effect July 2, 2021.
Paducah Power has not increased its base electric rates since 2014, although periodic changes in the utility’s power cost adjustment — designed to recover wholesale power costs — have resulted in some changes in customer bills since that time.
The utility’s board began a series of monthly workshop discussions in August on a variety of topics related to electric rates.
The sessions are held following the regular board meetings, held at noon on the second Monday of each month, and are open to the public. In addition, the recorded discussions are available for review on the Paducah Power website.
Workshop topics include rate design issues and options, customer incentives through rate design, preliminary revenues and revenue requirements and cost allocation.
Paducah Power has not undergone a rate review/study since one in 2013 that preceded the last rate change, according to Dave Carroll, general manager.
Determining when new rates need to be established is a two-fold process, he said.
“One, are we meeting the revenue requirements? Right now, we have been utilizing cash for the last two years, so we haven’t been bringing in enough revenue to cover 100% of our costs.
“So, that’s the first part. The second part is, if you are going to do something with rates, you need to look at each individual rate class and how that cost is allocated between the (rate) classes.”
The workshop discussion are being led by Doug Handley, Paducah Power director of finance, power supply and rates.
“Doug was a consultant and this was a big part of what he used to do for other utilities,” Carroll said. “So, we’ve kind of brought that expertise in-house.”
In addition to Handley’s expertise, Paducah Power also has a lot more data available this time due to its automated metering infrastructure.
Outside consultants did most of the work on the previous rate study, according to Carroll.
“The last time there was some industry standards they (consultants) just tried to apply to our rate classes. This time we’ll actually be able to pull that data and know exactly how each rate class contributes. It will be a better, more accurate cost allocation process.
“As we get further into it, there’ll be more discussion where we’ll have several different options for different ways to do things. And, where we’re going to be looking for input from the board, and their thoughts on one methodology versus another one,” Carroll said.
“The combination of having the consultant on our staff now — and the data that we now have through AMI — gives us the ability to do that ourselves.”