As part of its response to this winter's higher gas rates, the Kentucky Public Service Commission is asking the state's five major distributors to begin filing monthly instead of quarterly adjustments in their gas cost recovery charges.

        That will include Union Light, Heat and Power Co., the Cinergy Corp. subsidiary in Northern Kentucky.

Huelsmann

        Martin J. Huelsmann, the Fort Mitchell resident who is chairman of the Kentucky PSC, said the commission thinks the monthly adjustments will give consumers quicker signals when prices are changing.

        Mr. Huelsmann, former executive director of the PSC who was named chairman in August, recently discussed this winter's gas crunch and other issues with the Enquirer's Mike Boyer.

        Question: Is it your feeling that the worst of this winter's gas crunch is behind us?

        Answer: I think the worst is behind us. In November, there were only 400 drills for natural gas nationally, and now, there are well over 1,100 rigs in operation.

        We're also having a lot of gas being taken out of wells we thought were dry in Kentucky, especially in the eastern part of the state. But it takes time for that gas to get to distribution centers. I don't think we're going to see gas at $2-$3 per thousand cubic feet again. I think it will be higher than that.

        Q: As part of the findings last month from the PSC's hearings on rising gas prices, the commission asked gas suppliers to look at ways of mitigating higher gas costs in the future including adoption of performance-based rate making. What is that?

        A: Performance-based rate making is a concept used by some of our utilities in the electric area. It's not been used much in the water and gas areas, and it's some thing we might like them to take a look at.

        In essence, with performance-based rate making, some of the money utilities make goes to consumers, and some goes to the utilities.

        It gives utilities an incentive to be more profitable, cut out some of the inefficiencies and be leaner. It's worked very well in the electric industry. We threw it out there to let them study it, and see if it's a viable thing in the gas area.

        Q: What's the status of electric deregulation studies in Kentucky?

        A: A state task force began studying the issue in 1998 and issued a report last year. The results of that study were that we shouldn't rush into anything.

        The Special Task Force on Electricity Restructuring, of which I'm a member, has been reformed. That task force is studying the issue again.

        Q: Why are Kentucky's electric rates so low?

        A: Our electric costs average about 4.8 cents per kilowatt hour. That used to rank us third behind Idaho and the state of Washington, but their power costs have risen because of the problems in California.

        I think our power costs are low because we have an excellent group of utilities that are well managed. We've also got a good General Assembly that has protected electricity in the state. Most of our electricity is coal-fired, and coal has been relatively inexpensive.

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