Storm Damage to Kentucky Utilities Could Top $200 Million

Electric utilities smacked by two of the worst power outages in Kentucky history will have more bad news for weary customers: higher electric bills and no promises that it can’t happen again.

Power companies were forced to spend millions on line repairs after the remnants of Hurricane Ike in September and the January ice storm caused massive blackouts.

The utilities’ bill from both storms is still being calculated, but the state agency that regulates power providers offered a staggering preliminary estimate of the ice storm’s havoc.

“The damage to electric infrastructure statewide is likely to be in the neighborhood of $200 million,” said Andrew Melnykovych, a spokesman for the Public Service Commission.

Remnants from Hurricane Ike knocked over trees and brought branches crashing down on power lines in mid-September, leaving about 600,000 utility customers in Kentucky without power.

Then it was the January ice storm’s turn. Two rounds of freezing rain coated trees with a thick layer of ice, once again sending branches crashing down on power lines and causing 769,000 outages and at least 36 deaths. Much of western Kentucky was completely blacked out, phones went dead and frigid temperatures added an extra hardship for residents.

“We had lines down, poles broken for several miles around here,” said Dewey Bratcher, whose Grayson County home was without power for 16 days.

Bratcher’s provider, Warren Rural Electric, and other nonprofit cooperatives that provide power to rural areas were among the hardest-hit utilities in the ice storm. The Kentucky Association of Electric Cooperatives estimated its member utilities incurred damages of more than $114 million from the storm.

“I’ve been in the business for 15 years, and it’s entirely the worst I’ve ever seen,” said Dennis Cannon, a vice president with the cooperative association. The Ike storm “was difficult but it was not nearly the size and scope of this.”

The ice storm’s costs dwarf the damage estimates from Ike, which did most of its damage to the state’s two largest utilities, Louisville Gas & Electric and Kentucky Utilities. Chris Whelan, a spokeswoman for the utilities’ parent company, E.On, said the wind storm bills for the two utilities totaled nearly $27 million.

Whelan estimated LG&E customers can expect to pay about 35 cents extra a month for five years per $10 million of storm damage, while Kentucky Utilities customers would see their monthly bills go up 25 cents a month per $10 million of storm damage. But she said the utility has not requested any rate increases for either storm from the Public Service Commission, which would have to approve the increases.

Cooperative customers would potentially see smaller increases, Cannon said, since they’re not privately owned and can get state and federal disaster assistance.

In both storms, falling trees and branches were the main outage culprit, but both storms were so severe that even a massive tree-trimming effort by utilities beforehand would have had little effect, Melnykovych said.

“Tree trimming would have done you no good at all (in this case) unless everybody was told to clear all trees within 200 feet of a power line,” Melnykovych said.

The Public Service Commission allows the state’s utilities to set their own tree-trimming standards, he said. That’s a concession to private property owners, who may complain if utilities were to trim back a prized tree in their yard, Melnykovych said.

The other alternative to protecting power lines is burying them, an expensive and tedious undertaking, experts said.

Burying power lines costs about ten times as much as installing aboveground lines, around $1 million per mile, said Ed Legge with the Edison Electric Institute, a Washington-based group for shareholder-owned electric companies. Those costs would inevitably be passed on to the consumer, he said.

“We could provide a bulletproof system, but nobody could afford the electricity,” Legge said. He added that underground lines can be more costly to repair when they break down.

Legge said a series of storms in 2006 and 2007 prompted Ameren Corp., a St. Louis utility, to propose $300 million in spending to bury a fraction of its 27,000 miles of overhead power lines. Those storms left more than 500,000 without power.

Asked if she expected a push from LG&E and KU customers to bury power lines, Whelan said “there will always be a discussion and debate” on that subject.

But “this was a storm of a lifetime and it just so happens that it came on the heels of the other worst storm we’ve ever had,” Whelan said. “It was not something that any one had even seen.”