FRANKFORT, Ky. — Kentucky Frontier Gas is asking the Kentucky Public Service Commission to reconsider a recent rate decision, arguing the approved rate structure could create major cash flow problems for the utility.
In a motion for rehearing filed with the PSC, Kentucky Frontier says the commission’s April order did not raise monthly customer charges enough to cover the company’s fixed operating costs.
The utility had requested a monthly customer charge of $25, similar to rates charged by larger Kentucky gas companies, but the commission approved a charge of about $17.63 per month. Kentucky Frontier argues that amount would only cover about one-third of its summer operating expenses, when gas usage drops sharply.
The company says it could be forced to borrow at least $300,000 just to make it through the summer months because most of its approved rate increase was tied to gas usage rather than fixed monthly charges. The utility also cited unusually high natural gas costs during this past winter’s cold weather, saying those expenses prevented the company from building up cash reserves needed for lower-usage summer months.
Kentucky Frontier serves about 4,700 customers across several Eastern Kentucky counties, including Pike, Floyd, Johnson, Letcher and Perry counties.
In its original order, the PSC approved a lower overall revenue increase than the utility requested and raised concerns about some of the company’s expenses and affiliate business relationships.
Kentucky Frontier is now asking the commission to raise the monthly customer charge to at least $22.50, or alternatively to approve a revised rate structure aimed at improving year-round cash flow.
