New Paducah Power GM talks about company
PADUCAH, Ky —
Gary Zheng’s been on the job two days. The new General Manager at Paducah Power says he’s done his research, and knows the issues the company is facing.
Zheng says one of the best way to deal with the problems is to utilize the company’s strengths: its employees and its customers. Zheng also says he plans to be transparent with the people in Paducah as well as work closely with Paducah Power management and the board. He says, “I found out the board members really care about the rate payers, the people, and how we manage the utility.”
Zheng says he swapped notes with four-month interim General Manager Mark Crisson. Zheng says he holds a lot of the same philosophies as Crisson and he’s willing to try anything and everything to bring Paducah Power out of debt and reduce rates. But he does not believe bankruptcy is the answer because Paducah Power will try to refinance on the company.
Paducah Power offered him a one year contract with a six month severance package. Zheng also said his contract is renewable, and hopes he can do enough Paducah Power to continue in his position as General Manager.
The Paducah Power board says they hired Zheng because of his experience fixing a financially broken utility company. And as for his plan to reduce rates for ratepayers, he plans to follow the rate recovery plan as is right now. He says some things in the plan should work, and some may not but he and Paducah Power will determine what works and make decisions from there.
Part of the rate recovery plan is in surety bonds. Zheng says surety bonds will help Paducah Power recover from debt in the short term. It’s especially important because Zheng says the debt is one of the greatest hindrances the utility faces. Zheng told me he believes the surety bonds will be approved. Zheng says in regards to the power supply cost, “(It’s) really out of control. That’s the reason PPS has to charge the rate today. It’s not so PPS can make a profit. Actually PPS is really bleeding. Its the power supply cost. We have to pay that.”
Zheng says the surety bonds are on schedule to clear by the middle of this month. He says ratepayers should expect some relief on their rates by July, but as for how much relief, Zheng says it’s out of the company’s control. He says, “We hope in July we can see some relief on the rate. Can we really reduce 2 pennies, 2 cents I’m not sure of that, but definitely we should have some positive results on that part.”
As for fixing Paducah Power after July, Zheng says the answer may lie in surrounding power companies. He emphasized ‘we don’t know what we don’t know’. So as part of a long term remedy, Zheng plans to talk to other power companies. He says Paducah Power could benefit from buying or selling assets. Outside power companies also could present their own offers, but the key is to ask and research.
Zheng’s experience he brings to Paducah from a Lubbock, Texas power company Lubbock Light and Power. Zheng believes his experience managing the power company in Lubbock will help him in Paducah. He says the two companies share a lot of similarities, but the difference is Paducah Power is in a lot of debt. Part of this debt originates from the costs the company accrued from Prairie State and the Peaking Plant, but Zheng says the company will have to cope. He says, “Not only did Prairie State not perform as they were supposed to perform. Also we bought more than we needed. So those two things added together makes it more difficult. The third part is the peaking plant. The peaking plan than more than we needed. It made it very expensive.”
Zheng says one of the lessons he learned in Lubbock, transparency. It’s part of his philosophy on how a publicly-owned utility should be run in order to keep rates down. Zheng says, “The three things most important, one is reliable, we talk about keeping the light on. The second is affordable we need to really work on that. The third part is predictable. When we talk about predictable, that’s what we talk about being transparent.”