Audit: Utility Should Pull the Plug on Business as Usual

April 23, 2010

FRANKFORT, Ken. - A highly critical new audit of the East Kentucky Power Cooperative (EKPC) says the utility has put itself in a deep financial hole by keeping rates artificially low while being too-reliant on building, owning and operating electric-generating facilities. The audit was performed at the order of the state Public Service Commission (PSC) after serious questions arose in recent years about the member-owned non-profit utility's governance and financial condition.

Tona Barkley is a member of the Owen Electric Cooperative, which gets its power from EKPC. She says the audit reinforces concerns she's had that EKPC hasn't been spending its money wisely.

"They continue to pursue options that are costly when there are a lot better alternatives that are also safer for the public."

The audit considers future environmental regulations as a risk to the utility, which Barkley believes means EKPC should be relying less on coal as a major generation fuel. If it explored other resources, EKPC and Kentuckians would benefit, she says.

"If they choose that route of energy efficiency, that's going to create jobs; many more jobs than this coal plant will create."

Barkley is eager to see whether the audit results lead to changes for EKPC's half million customers.

"The jury's still out, but it would seem to me that it puts a lot of pressure on EKPC to change its management practices."

EKPC's board chairman stated the board is "dedicated and committed to do whatever it takes to be a better board, to work with the PSC and to make East Kentucky a better unit."

According to PSC officials, EKPC's debt is currently in excess of $2.5 billion, and could top $4 billion if the current course isn't reversed. The cooperative plans to ask the PSC for a rate increase to take effect January 1, averaging about $4 per month for the typical household. It says that would generate $50 million a year. EKPC recently withdrew its application to the PSC for credit approval to spend nearly $1 billion to build the controversial Smith 1 coal-burning power plant.

Tom Joseph, Public News Service - KY