DEFER PPS board was right to hold off on raises At this weeks meeting of the Paducah Power System board of directors, a motion to give the utilitys employees a 2 percent raise died for lack of a second. While unfortunate for the workers, we think it was appropriate. Its not that we begrudge PPS employees a raise. In ordinary times, we would be fine with it. But these are not ordinary times for Paducah Power. Its rates, its costs and its debts are out of control, and we think the public reasonably expects to see belt-tightening at the utility. Board Chairman Hardy Roberts says the proposed across-the-board raises would add $80,000-$90,000 to the utilitys costs, which translates to about 30 cents per month per customer on PPS utility bills. Given what PPS customers are currently going through, thats 30 cents too much. Roberts says he plans to bring the raise proposal up again after the five-member board fills a vacancy created by the departure of former member Ray McLennan. We think Roberts should reconsider. As a businessman he knows that companies in the private sector freeze pay and cut costs when faced with problems like the ones now confronting Paducah Power. The fact the utility can still fund raises simply by charging its captive ratepayers more doesnt mean it should do it. Paducah Power is presently saddled with $627 million in debt, a staggering sum for a utility serving 22,000 customers. It has a largely non-performing peaking power plant on which it owes well over $100 million. Meanwhile, between December of 2012 and April of this year PPS customers have endured rate increases of more than 20 percent, plus a Power Cost Adjustment surcharge of as much as 30 percent of the base rate earlier this year. The PCA currently is set at 2.5 cents per kilowatt hour and but for the intervention of the board it would have risen 50 percent to 3.223 cents per kilowatt hour in the current quarter. The ratepayers have taken a beating over the past two years - granted largely due to the missteps of a previous slate of directors - but it is simply not reasonable for the current board to ask ratepayers to pony up for raises before the board takes some concrete steps toward cutting debt and providing long-term rate relief. We think marketing the peaking power plant is the most obvious step the board could take and there may be other assets such as PPS fiber Internet loop that could and should be sold to reduce debt. The board has moved quickly to hire recruiters to help it find a replacement for recently departed general manager Dave Clark. We are frankly disappointed it has not moved just as quickly to hire a restructuring specialist to help it explore asset sales and other options it may have to reduce liabilities and lower rates. It needs to do so. As for the raises, now is simply not the time. PPS needs to focus on cutting costs, not adding to them, and demonstrate that commitment to ratepayers.
Posted on: Sun, 19 Oct 2014 01:19:40 +0000
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