WSAZ Investigates | Kentucky Power fuel adjustment costs

(WSAZ) - Last week, WSAZ began digging into Kentucky Power bills after many customers reached out to us when they saw a fuel charge had increased significantly.

The fuel adjustment charge fluctuates each month and reimburses the power company for the fuel they buy to run the plants.

Kentucky Power said last week, customers should expect some relief on their bills next month, as the price of fuel has gone down.

WSAZ dug into the numbers to see if that will be the case.

Each month, Kentucky Power has to file documentation with the Public Service Commission, breaking down how much they spent buying fuel, and what cost will be passed along to the customer per kilowatt hour.

These documents are public record and you click here to find them on Public Service Commission’s website, or click here to go directly to the documents.

What WSAZ found, is it all comes down to one number to calculate the cost for customers.

$0.03556 per kilowatt hour is the rate Kentucky Power customers were charged on their January bills, for the fuel adjustment cost alone.

This is based on fuel costs in November, as the price lags two months.

If you used about 2,000 kWh, you would have been billed about $71.

The picture above, shows the rate $0.00080 as the rate Kentucky Power customers will see per kilowatt hour on their February bill.

To calculate how much your fuel adjustment cost will be, just multiple how many kilowatt hours you use, by $0.00080.

Using that rate multiplied by 2,000 kWh, the rate will only be $1.60.

Last week, we spoke with Erica Carroll who had a fuel adjustment charge of $92 in January, and with the February rate, WSAZ found she will only have to pay about $2 next month.

WSAZ called her to tell her about this decrease, and while she’s glad about the dip in her bill, she’s frustrated with the high costs.

”It needed to be addressed, because people can’t pay this stuff ... If it can decrease by $100, $200, great because I feel like my average power amount is $280-$235, we can do that,” Carroll said.

WSAZ reached out to to the Kentucky Public Service Commission to see if there is anything they can do to prevent these unexpected hikes.

They said Kentucky Power would have to file a proposal to make any changes such as imposing a cap on how much the power company can collect for reimbursement or spread those charges out on customer bills overtime instead of all at once.

WSAZ asked Kentucky Power if they planned to do that, this was the response we received:

Fuel is very volatile and what has happened over these past several months is believed to be an anomaly, because we’re seeing fuel prices already going back down. So to go to the PSC right now and propose something different because of the prices over the past few months could actually end up harming customers. In every filing a utility makes, it has a duty to find the balance for the company and the customer. Historically, with fuel costs because of the volatility, it has always been best to have smaller monthly charges rather than one annual true up. It has been very unusual to see a swing like everyone has seen these past few months. Natural gas and coal prices have been up nationwide. Just like everyone is feeling the effects of what is happing at the gas pump, in the groceries stores and in everything that we purchase, it’s the same situation with fuel costs.

We asked what the solution would be, because families cannot afford massive hikes on their bills unexpectedly. A Kentucky Power spokesperson responded with ways the company offers payment plans to help customers:

Keeping in mind this is a temporary spike, customers should contact us for starters (800-572-1113 24/7) to discuss a plan. Examples of things our customer service agents can do:

--Enroll customers in AMP (Average Monthly Payment) Plan. AMP evens out payments throughout the year to account for seasonal spikes in usage. Bills adjust on a 12-month rolling average and change only slightly each month, making bills more predictable. And unlike traditional budget billing plans, there is no settle-up month.

--In cases where bill payments have fallen behind, we will work with customers to set up a payment plan.

--We also offer a one-time payment extension to give you more time to make your bill payment.

Customers can also take action to reduce usage – heating and cooling makes up 50% of your bill for starters. Poorly insulated houses are huge consumers of electricity. We also have payment assistance programs for income eligible. Those are managed through Community Action of Kentucky.

We pointed out that a payment plan does not help a family who is already struggling and asked again if anything will change with the charges in the near future.

This was the response WSAZ received:

Kentucky Power doesn’t really have any plans, because they think these fuel spikes are an anomaly and likely won’t occur again. The last peak for the fuel adjustment was in 2008 and normally does a great job of preventing rate volatility. We’re always looking for ways to keep rates manageable. In this particular case, the fuel spike is an anomaly so taking action right now could cause more harm. If we based the rate off the past few months, it would not be an accurate representation of what fuel costs typically are.

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