The Kentucky Public Service Commission has selected Concentric Energy Advisors to conduct a review of efforts by Big Rivers Electric Corp. to mitigate the effects of the departure of the utility's two largest customers.
Concentric will begin work in November. This focused management audit is scheduled for completion next spring.
In the last 15 months, aluminum smelters in Hawesville and Sebree have stopped purchasing power from Big Rivers. The two smelters at one time accounted for about two-thirds of Big Rivers' load and revenue.The PSC has over the last year twice approved rate increases that allowed Big Rivers to maintain financial stability following the loss of the smelters. The PSC ordered the focused management audit when it approved the most recent rate increase in April.
In ordering the audit, the PSC said Nov. 10 that the major focus “will be on the steps that Big Rivers has undertaken or should undertake to mitigate any further financial impact” from the loss of the smelters, as well as “the strategic planning, management and decision-making of Big Rivers relating to its mitigation efforts.”
The audit will examine numerous potential mitigation measures, including the possible sale of power plants that are no longer needed and the potential for using surplus generating capacity to profitably sell power to users outside the Big Rivers system. Concentric is expected to gather information from Big Rivers and from many of the parties that participated in the recent rate cases.
Big Rivers, which has mostly coal-fired capacity, is owned by the three distribution cooperatives to which it provides power. Together, the three cooperatives serve about 112,000 customers in 26 counties in western Kentucky. The customers include about 20 large industrial facilities.
Big Rivers owns 1,444 MW of generating capacity in four stations: Robert A. Reid (130 MW), Kenneth C. Coleman (443 MW), Robert D. Green (454 MW), and D.B. Wilson (417 MW). Total power capacity for the cooperatve is 1,819 MW, including rights to Henderson Municipal Power and Light Station Two and contracted capacity from the Southeastern Power Administration.