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KY utility seeks 19 pct. rate hike after Century closing

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HENDERSON, Ky. (AP) — A regional utility in western Kentucky is asking that state's Public Service Commission to approve a substantial rate increase later this year, citing the impending loss of its biggest customer.

The Gleaner of Henderson, Ky., reports Henderson-based Big Rivers Electric Corp. filed a request on Jan. 15 to raise its wholesale electric rates in the area by $74 million annually beginning in August. It cited the expected departure of Century Aluminum's smelter in Hancock County.

"Cost-cutting alone cannot offset this deficiency," Big Rivers spokesman Marty Littrel said Wednesday.

The request stems from a dispute between the utility and the smelter over electric costs. The smelter notified Big Rivers last year that it would terminate its contract to purchase power in August 2013.

The application says a residential customer would see their bill increase by nearly $22 a month based on typical power usage.

Kenergy Corp. CEO and President Greg Starheim said the impact to rural cooperative customers could be even greater. He said rural customers could end up paying about $24 more each month.

Starheim says the co-op will work on educating customers on ways they can reduce power consumption.

Meanwhile, Big Rivers is seeking to increase electric rates of large industries by 17.9 percent, and it may need to make further cuts.

Starheim said that "to reduce operational expenses in the future, discussions have included idling or selling a power plant."

In its application with the PSC, Big Rivers said idling its Wilson plant would result in the loss of 92 jobs.

"We still don't know if it would be Wilson or not," Starheim said. "We had to put something down for the rate case, and that's what we put down. But that could change ... It doesn't mean that Sebree's (complex of generating stations) are being ignored, either."

Big Rivers is also trying to recruit new industries that would consume large amounts of electricity and checking on the possibility of selling surplus power to other utilities.

Copyright 2012, The Associated Press