‘Excessive and disturbing’: Regulator slashes Kentucky Power proposed rate hike by two-thirds

PSC grants 5.66% residential rate increase to utility serving 20 Eastern Kentucky counties

By: - January 19, 2024 8:56 pm

Kentucky Power’s gas-fired Big Sandy power plant in Lawrence County. (Creative Commons photo)

Kentucky’s utility regulator has allowed Kentucky Power to raise its electricity rates, but by much less than what the utility had originally asked for. 

The Kentucky Public Service Commission in a Friday afternoon order allowed Kentucky Power, which serves about 163,000 customers in 20 Eastern Kentucky counties, to increase monthly bills  for the average residential customer by about 5.66%, or the equivalent of a monthly utility bill increasing by $8.32. 

This is less than one-third of the rate increase that Kentucky Power first requested last year, which would have amounted to an 18.3% rate increase in monthly bills costs for the average residential customer. One state report last year found the investor-owned utility’s residential customers already pay the highest average monthly bill in the state at $187.56.

The utility in November proposed a settlement agreement with other parties in the case, agreeing to lower its rate increase for its average residential customer so that monthly bills would only increase byto 10.7%. 

The commission in its order decided to reduce the rate increase even further in part because of public comments the regulator received, which showed the impact of the full, original rate increase on residential customers was “excessive and disturbing.” 

Kentucky Power lowers proposed rate hike after pushback. Some ratepayers say it’s still too much.

“The number of comments the Commission received and the turnout at the public meetings was significant. In fact, two counties passed resolutions decrying a Kentucky Power rate increase,” the order stated. “Other public comments were all of a similar nature, that a typical residential customer of Kentucky Power cannot afford another rate increase.” 

A spokesperson for Kentucky Power did not immediately return requests for comment. 

Bren Martin, a Greenup County-based member of the progressive grassroots organization Kentuckians for the Commonwealth, previously gave public comments last year on the rate increase. 

Martin in an email said she was “very pleased” with the regulator’s decision but that she was still concerned Kentucky Power attempted a substantial rate increase in “high poverty areas.” Kentucky Power serves some of the most economically-challenged counties in the state or nation.

In a separate order earlier this year, the commission allowed Kentucky Power to securitize $470 million of costs associated with rate hike. Securitization, which was legalized for utilities to use through legislation passed with bipartisan support last year, allows utilities to bundle costs into a bond to sell, which can potentially mean lower costs to ratepayers by spreading costs over a longer timeframe. That’s compared to traditionally recouping such costs through electricity rate increases.

According to a press release from the Kentucky Energy and Environment Cabinet, securitization will save Kentucky Power customers $74.4 million over 20 years, compared to utilities recovering the costs through rate increases.

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Liam Niemeyer
Liam Niemeyer

Liam covers government and policy in Kentucky and its impacts throughout the Commonwealth for the Kentucky Lantern. He most recently spent four years reporting award-winning stories for WKMS Public Radio in Murray.