Kentucky Power’s proposed rate hike would spell disaster for many in Eastern Kentucky

Kentucky Power cites increased costs due to weather events as one of its justifications for an 18.3% residential rate increase.

ASHLAND — In an all too familiar announcement, “Kentucky Power has filed a comprehensive rate review with the Kentucky Public Service Commission (PSC).”  The utility is requesting to institute changes to increase its revenue by 13.6 percent.

The Notice of General Adjustment of Existing Rates shows a proposed 18.3% increase in residential service rates and an 8.6% industrial general service increase to go into effect in early 2024. Thus, the burden of the proposed rate increase would weigh heavily on residential ratepayers — amounting to an additional $35 a month for the average residential ratepayer, according to Kentucky Power’s records.

American Electric Power headquarters in Columbus, Ohio. American Electric Power, a major investor-owned electric utility, owns Kentucky Power.

Some reasons noted by Kentucky Power for the rate increase are declining population, decreased load and increased costs due to weather events. You can find additional information on the proposed rate hike on Kentucky Power’s website. The utility is a subsidiary of American Electric Power (AEP), based in Columbus, Ohio, which earlier this year announced that a deal to sell Kentucky Power had been canceled.

If all goes as carefully crafted by Kentucky Power, this rate increase will no doubt have a negative impact on the budgets of many individuals, families and businesses in Eastern Kentucky. According to the Kentucky Energy Affordability Dashboard, ratepayers in Eastern Kentucky already pay the highest rates in the state.   

The following is a response I received from Kentucky Power on the rising cost of electricity, “A significant portion of our expenses are fixed costs that do not vary depending on the amount of electricity sold. When we lose customers, fixed costs are spread over fewer remaining customers, causing the price of electricity to increase.”  

The consistent loss of ratepayers, currently at 11,400 lost since 2008, as referenced by Kentucky Power, has frequently been cited as a justification to raise rates.  

In 2020 Kentucky Power requested a rate hike that went into effect in 2021, resulting in the following, as quoted from the PSC press release on the matter,  “For residential customers, the PSC is authorizing a $17.50 monthly customer charge, an increase from $14.00, and an energy charge of .11032 per kWh, the average bill increases $18.59, or 15.46 percent.” This was the third billing increase for ratepayers in a five-year period.   The increases may have been higher if ratepayers had remained silent. 

In addition, adjustments to bills are based on the cost of fuel. According to the PSC, “The Fuel Adjustment Clause (FAC) is a mechanism that permits jurisdictional utilities to regularly adjust the price of electricity to reflect fluctuations in the cost of fuel, or purchased power, used to supply that electricity.”  The FAC has hit many ratepayers especially hard when fuel prices spike. 

Unfortunately, the cost of electricity is just too high for many ratepayers.  According to the Center for Biological Diversity, the percentage of Kentucky customers that had their power disconnected increased by 228% in 2022. The national increase was 29%.  In the first 10 months of 2022, more than 52,000 Kentucky customers were shut off. In addition, the average electric bill went up 17% in the commonwealth. 

An 18.3% rate increase could equal disaster for many members of our 606 family served by Kentucky Power, especially our vulnerable populations —the elderly, sick, young and low-income.  Electrical service should be affordable and accessible to all, as opposed to only those with a certain degree of financial resources.  

There are programs such as the Low Income Home Assistance Program (LIHEAP) that provide federally funded assistance to reduce the costs associated with home energy bills for those who qualify. The funds are not unlimited though.  Most ratepayers in Eastern Kentucky do not qualify for assistance.

Make no mistake, I genuinely appreciate the hard work of those who work at Kentucky Power and the services they provide. At the same time, I am concerned with fairness to ratepayers in Eastern Kentucky.  

Backed by provisions in KRS Chapter 278, the mission of the Kentucky Public Service Commission is to foster the provision of safe and reliable service at a reasonable price to the customers of jurisdictional utilities while providing for the financial stability of those utilities by setting fair and just rates, and supporting their operational competence by overseeing regulated activities. With Kentucky Power being a monopoly authorized to provide essential services, it is crucial for citizens to partake in the process of the proposed rate increase.  

 To file public comments in this rate case, include the case number (Case No. 2023-00159 Kentucky Power) within the subject line of your email to the Public Information Officer at [email protected] and provide your full name and place of residence in the body of the e-mail; or send via mail to Public Service Commission, 211 Sower Boulevard, Post Office Box 615, Frankfort, KY 40602.

Also, public meetings will be held on this issue. The details will be released soon by the PSC. 

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our web site. Please see our republishing guidelines for use of photos and graphics.