Basics of the Kentucky Public Service Commission, Part 1:
What is the Public Service Commission, and who and what is regulated?
Kentucky Public Service Commission
The Kentucky Public Service Commission (“PSC” or “the Commission”), is an administrative body empowered by the Kentucky legislature to make decisions that either directly or indirectly impact the rates of nearly all Kentucky utilities. The PSC consists of three Commissioners, a Chairman, a Vice-Chair, and a Commissioner; an Executive Director; and legal, technical, and administrative staff totaling approximately 80 individuals. The Commissioners are appointed by the Kentucky Governor to staggered four year terms and are responsible for ultimately deciding the cases before the Commission. Administrative and policy responsibilities of the PSC are handled by the Executive Director, who is chosen and appointed by the Commissioners.
What does the PSC Regulate?
The essential mission of the PSC is to ensure the provision of safe and reliable service to all utility customers at fair, just, and reasonable rates. In effect, this means that any change to rates or major undertaking (i.e, large construction projects, significant loans, or transfer of ownership) a utility wishes to make, must first be approved by the PSC. For-profit electric, water, natural gas, and sewer utilities are all regulated by the Public Service Commission. Rural Electric Cooperative Corporations (“RECC”), and generation and transmission cooperatives – such as Big Rivers Electric Corporation and Eastern Kentucky Power Cooperative (“EKPC”) – are regulated by the PSC, as are Water Districts. Municipal-owned utilities, such as Louisville Water, and Sanitation Districts, like Northern Kentucky’s Sanitation District No. 1, are not directly regulated by the PSC. However, a municipality acting as a wholesaler of utility services to a regulated utility must secure PSC approval before amending the wholesale rates.
What Types of Cases does the PSC Hear?
The majority of cases before the PSC are initiated in one of two ways: either an Investigation or Examination is initiated by the PSC, or a utility files an application seeking approval for something. The PSC may initiate an Investigation to inquire into a utility’s compliance with previous Commission Orders, or Investigation of Service, or an Investigation into compliance with Commission regulations. Examinations are more routine cases initiated to review the status of a previously approved rate mechanism, such as an Environmental Surcharge Mechanism, or the application of the Fuel Adjustment Clause. Utilities commonly file an application for items such as a Purchased Water Adjustment, Purchased Gas Adjustment, Increase in Base Rates, Alternative Rate Filing (“ARF”), or a Certificate of Public Convenience and Necessity (“CPCN”). These cases all have either immediate or delayed impacts on rates.