Create a more accountable organization structure

I believe that to keep growing this community we must attend to the basics, affordability. We need to rethink the relationship between the city commission and Paducah Power and create a more accountable organization structure to Paducah Power Systems.

Quoting Steve Wilson, Paducah Sun, January 24, 2016

The PPS Board [Paducah Power] made a series of costly mistakes in the past decade that piled up excess capacity, created a huge debt and stuck Paducah with the state’s highest electric rates.

Quoting Jim Paxton, Paducah Sun, October 2, 2015

But PPS, under previous management, later changed course, buying excess capacity at Prairie State with an eye towards selling the excess on the open market at rates it presumed would be profitable, thus theoretically allowing it to lower rates. As PPS customers know today, that gambit proved disastrous. Changes in market conditions, due in part to a collapse of the natural gas prices, left PPS selling power from the coal fired Prairie State campus at prices significantly below what it has to pay for the power it buys to supply its customers. One result was local power rates 141% above the state average

Paducah Power Changes

Fifteen (15) years ago Paducah Power Systems (“Paducah Power”) was a dramatically different entity than it is today. I suspect nearly all of us wish we could roll back time and keep our power company a small, unregulated, power distribution company that bought power from TVA. However, Paducah Power has evolved into a company that now owns or partially owns multiple and various power production operations. As a result, there is a lot of debt. The rates are no longer pleasant, and there is no entity empowered to regulate those power rates.

In fact, here is what Paducah Power said about setting its own rates in a 2009 bond prospectus:

“Upon termination of the TVA wholesale power contract in 2009, TVA will no longer regulate the retail rates of PPS [Paducah Power]. PPS will thereafter have sole authority to set its retail rates and charges and its rates will not be subject to jurisdiction of any regulatory body, including the City.”

ThermostatThe present Paducah Power Board is obviously working hard to find solutions to a “mountain size” problem. However, as “Paducah Power” has evolved and expanded its mission, I believe it is appropriate to re-think and re-tool the relationship between the City of Paducah and Paducah Power Systems.

In the early 1940s, the Kentucky Legislature set up the organization for local power boards through enactment of what is known as the Little TVA Act. Interestingly, (well,  maybe it is not that interesting but certainly noteworthy), in the same legislative session the Kentucky Legislature also re-enacted an old statute codified as KRS 96.170. This statute empowers a city commission to regulate electric rates. While the statute is old and is also outside the Little TVA legislative framework, it is still alive and kicking. I believe the Paducah City Commission should explore whether this statute allows the City to regulate electric rates as opposed to completely delegating that authority to the Paducah Power Board.

Other cities our size do not delegate this power to their utility boards, but rather leave decisions as to the electric rate at the “city commission” level. Employing this process allows the citizens and consumers a greater voice in the management and mission of their publicly owned power company.