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Big Rivers Electric Corporation Rate Cases
When Big Rivers Electric Corporation, a small cooperative in western Kentucky, lost its major customers--two large aluminum smelters that formerly accounted for two-thirds of the company's load--the cooperative gained enormous excess capacity. Big Rivers responded by proposing to idle one or two of its coal plants for a few years, while requesting large rate increases for its remaining customers to absorb the costs of the loss of the smelters. In two related rates cases, Synapse provided expert witness testimony critiquing Big Rivers' economic analyses, including its forecast of market demand and the price of electricity; and examined rate design issues, including treatment of stranded assets and the balance between demand and energy charges. As a foundation for our analysis, Synapse developed detailed spreadsheet recalculations of the company's future under more reasonable assumptions. In issuing a decision, the Kentucky Public Service Commission incorporated several Synapse recommendations, including the argument that the Wilson coal plant represents excess capacity and should be excluded from rate recovery. The Commission ultimately granted Big Rivers a base rate increase of 14 percent, which is approximately 51 percent of the cooperative’s originally requested revenue increase.