Kentucky Power admitted in a Kentucky Public Service Commission filing recently that it overcharged its customers by $3.2 million in January and that the amount would be returned to customers in March via a reduction in the company’s fuel adjustment clause in March.
The letter was sent by Brian K. West, Kentucky Power’s vice president of regulatory and finance, in connection with regular filings it is required to make regarding its Fuel Adjustment Clause, which is intended to allow the company to recoup costs connected to fluctuating costs of fuel and power.
According to the letter, the overcharge, referred to in the letter as an “over-recovery,” resulted from a higher-than-normal Fuel Adjustment Clause factor caused by high fuel costs and higher-than-estimated usage.
In response, West wrote in the letter, the company will reduce its March Fuel Adjustment Clause factor by 72 percent from $0.00762/kWh to $0.00213/kWh, which is 94 percent less than the January factor of $0.03556/kWh.
“The fuel system set up in Kentucky allows any unexpected over-recovery to be returned to customers quickly in the form of an offset in the going forward fuel factor,” West wrote in the letter.
Further, West wrote, the company “recognizes the burden” that fuel clause volatility can impose on its customers and proposes the following actions:
• To immediately notify the PSC of any abnormal change in the Fuel Adjustment Clause factor;
• In the event there is an abnormal increase, the company proposes to spread the increase out over a period of months in order to lessen the immediate burden on customers; and
• Undertake a review of changes in the calculation methodology to reduce monthly volatility in its calculated Fuel Adjustment Clause.