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Kentucky Power proposed 18% rate increase for residential customers

 The view of Appalachian Kentucky from Pine Mountain.
Ryan Van Velzer
/
LPM
The view of Appalachian Kentucky from Pine Mountain.

The typical residential customer would see their monthly bill increase by $35, or about $420 per year, under a proposed rate increase that Kentucky Power filed with state utility regulators in late June.

The proposed rates are nearly double the monthly increase residential customers saw the last time eastern Kentucky’s largest utility went before regulators at the state’s Public Service Commission in 2020.

Kentucky Power says the proposed rates are a reflection of the challenges facing the utility, which serves more than 163,000 homes and businesses in eastern Kentucky. In the years since the last rate increase, the service area has experienced devastating wind storms, an ice storm and historic flooding.

The company’s lost more than 11,400 ratepayers in the last 15 years including large industrial customers like AK Steel, coal mines and hospitals. That’s resulted in the utility needing to spread its fixed costs among a smaller pool of customers.

In April, Kentucky Power’s parent company American Electric Power terminated a $2.6 billion sale to Liberty Utilities.

“The past few years have been challenging for eastern Kentucky. That's why we are continually working hard and taking meaningful steps to keep your electricity costs as low as possible,” Kentucky Power wrote in a press release. “We understand an increase -- no matter how big or small -- is not welcome news, but we are committed to providing reliable electric service for the best rates possible.”

Late last month, regulators also denied Kentucky Power’s bid to recover $11.5 million in power costs related to last year’s winter storm. That storm caused chaos across the regional energy grid, causing LG&E and KU to implement rolling blackouts and forcing Kentucky Power to pay extraordinarily high wholesale electricity prices to avoid the same fate.

State regulators blamed Kentucky Power for failing to address known shortfalls in its ability to provide power to its customers.

“Importantly, between consumers and Kentucky Power, the utility is the only entity that can address the impact of being ‘capacity short,’ and the result of the utility’s unwillingness to address that fact should not be foisted upon captive ratepayers. Allowing or incenting such behavior would not result in fair, just or reasonable rates,” commissioners wrote.

Kentucky Power says the application to increase rates will also include benefits for customers that include the expansion of a tree-clearing program, increased funding for energy assistance programs, and an extension of bill due dates from 15 to 21 days to give customers more flexibility.

Eastern Kentuckians already pay the highest rates for electricity in the state, according to a Kentucky energy dashboard.

Any approved rate changes would likely take effect beginning in 2024.

Ryan Van Velzer is WFPL's Energy and Environment Reporter. Email Ryan at rvanvelzer@lpm.org.

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