Lone Kentucky Public Service Commissioner approves sale of Kentucky Power to Liberty Utilities with conditions
* This story has been updated*
After months of public pushback from lawmakers, and controversy over the approval of nominations to the Kentucky Public Service Commission, on Wednesday the PSC approved the sale of Kentucky Power to Liberty Utilities with conditions.
Kentucky Power will be required to set up at least $113.5 million in funds to offset future rate increases and costs for ratepayers. The company serves 165,000 customers in eastern Kentucky.
Kent Chandler, chairman of the Kentucky Public Service Commission, issued the order on Wednesday. Although Chandler is the only commissioner serving on the three-commissioner board, Kentucky law KRS 278.080 doesn’t let vacancies prevent a single commissioner from making a decision.
Rep. Angie Hatton, a Democrat from Whitesburg and an attorney, said the sale is “certainly good news.”
Liberty proposed to pay $585 million more than Kentucky Power’s value. Hatton, along with 28 Kentucky Mountain Caucus lawmakers and Republican Attorney General Daniel Cameron supported a condition returning 90% of the profits — between $578 and $585 million dollars — to ratepayers as credits.
Although the PSC set different conditions, Hatton said they’ll still benefit ratepayers.
“It feels like the Attorney General's Office and the KIUC, as well as the legislators who make up the Mountain Caucus and some other local officials, who all really took some big risks in opposing this huge corporation, have really made a difference in that our customers will see a dent in their bills,” she said.
In a press release, Attorney General Cameron said he appreciates the commission adopting modifications.
“Our office went before the PSC to ensure Eastern Kentucky electric utility ratepayers benefitted from Liberty’s acquisition of Kentucky Power from AEP, and we are pleased that our efforts resulted in over $143 million in benefits for Kentucky ratepayers,” said Attorney General Cameron. “We know rising utility bills have strained the budgets of many Kentuckians, and we appreciate that the PSC adopted modifications to create savings for Kentucky ratepayers before authorizing the sale of Kentucky Power.”
Peter Hille is the president of the Mountain Association. In an emailed statement he said they are grateful that customers may see some savings but they still have concerns.
“We are disappointed, however, to hear that a large amount of the sale proceeds will go towards investments by AEP in utility renewable energy projects outside Kentucky, instead of being reinvested into a region that has had a history of resource and wealth extraction.”
The PSC issued a news release Wednesday detailing the conditions of sale. Liberty proposed to purchase Kentucky Power, a subsidy of American Electric Power and AEP Kentucky Transmission Company, LLC (Kentucky Transco) for $2.846 billion. That amount included taking on debt of $1.221 billion.
Liberty also committed to keeping “all current Kentucky Power employees with the same or similar compensation and benefits.”
In an emailed statement to WEKU, Kentucky Power said the sale to Liberty “is the best path forward for customers, communities and employees.”
The statement continued, “Additional regulatory approvals from the Federal Energy Regulatory Commission and the Public Service Commission of West Virginia are expected in the near future to allow the sale to be finalized by second quarter 2022 and the related benefits for customers to begin.”
The order requires that three funds be set up by Kentucky Power to address future rate increases, fuel adjustment costs and to pay for a lack of investment in infrastructure.
Ratepayers will receive $30 million “to remedy the continued subsidization of transmission investments of other AEP affiliates,” according to the PSC statement.
Kentucky Power would also set up a $40 million fund — a condition proposed by Liberty — to offset fuel adjustment costs between July 2022 and December 2023. The PSC approved that condition and said customers would see “a bill credit of $32.72 per month during the winter season and $1.40 during the non-winter season over the 18-month period.”
Finally, Kentucky Power would be required to set up a $43.5 million fund to pay for “storm damage.”
“While these expenses are a result of storm damage, they are a direct result of Kentucky Power’s underinvestment in its system, including the failure to address appropriate loading levels required for the utility’s distribution system.”
Just weeks before the sale, the Kentucky Senate failed to confirm Democratic Gov. Andy Beshear’s nominee Amy Cubbage. Cubbage temporarily served on the PSC during formal hearings on the sale of Kentucky Power. The Senate also failed to confirm Marianne Butler, another commissioner appointed by Beshear.
Beshear blamed the PSC’s lack of a quorum on politics during a press conference in late April. He has yet to name additional commissioners to the Public Service Commission.
This story was edited to reflect that the approval happened on Wednesday. It initially said the sale was approved on Tuesday.