American Electric Power says it has terminated negotiations with Liberty Utilities for the sale of Kentucky Power.
The two companies have been working to close the $2.6 billion dollar deal for the last couple years, but the Federal Energy Regulatory Commission nixed the original agreement late last year in a rare move. Regulators said the companies failed to provide complete information to evaluate the effect on customer rates, and proposed insufficient protections for ratepayers.
At the time, AEP said it was looking for a “best path forward.” On Monday, the owner of Kentucky Power confirmed the deal was dead and reaffirmed its commitment to operating in eastern Kentucky.
“As a partner in eastern Kentucky for more than 100 years, we’re renewing our focus on bringing opportunities to the region and supporting the communities we serve. We are working diligently to reimagine our strategy with the goal of not just supporting Kentucky, but being an essential part of its economic and energy future,” said Julie Sloat, AEP president and chief executive officer.
The long term decline of the coal industry has had a particular impact on utility rates in eastern Kentucky, which are some of the highest in the state. Kentucky Power lost more than 10,000 customers including heavy electricity users in the coal mining and steel industries over a decade. As industries closed and people moved from the region, fewer ratepayers remained to help cover the utility’s fixed costs.
More than a dozen eastern Kentucky counties topped the list for the most expensive monthly electric bills, based on data from 2020, the latest available. Last year, Attorney General Daniel Cameron opposed the sale to Liberty, saying Kentuckians in the eastern part of the state already had high electricity rates. He said the deal would only worsen that trend.
AEP officials say the company will now focus on right-sizing its rate base to address costs, including securitizing retired coal plants to reduce customer rates. The company plans to file a new rate case in June.
“Our team is eager to get to work implementing a refreshed long-term strategy that maximizes the full potential of our Kentucky operations – not just for AEP, but for the communities we serve,” Sloat said.
