The Kentucky Public Service Commission has issued a ruling on Kentucky Power’s rate increase proposal.
The PSC on Friday approved a modified settlement agreement.
The average residential electricity customer will see, starting in March, a nearly 6% increase, followed by a 1% increase next year.
That’s about half what the company originally sought. The average bill will increase less than $11 a month, compared with $27 as first filed last year.
Commissioners heard testimony from residents throughout eastern Kentucky who are struggling to pay their electric bills. Kentucky Power bills are the highest in the region, according to testimony.
The PSC also adopted a recommendation from Attorney General Russell Coleman’s office. Kentucky Power’s operations and management will be subject to an independent audit.
Coleman’s office, the de facto consumer advocate for Kentucky utility customers, asked the commission to deny any increase.
In its 225-page decision, the PSC said it had no legal basis to deny Kentucky Power any increase. Chair Angie Hatton, though, acknowledged the frustration of electricity customers.
“We heard emotional pleas at our public comment hearings from ratepayers. They are angry and scared of the additional financial hardship caused by any potential increase,” Hatton said. “The PSC must balance the interests of fair rates for all customers with the realities of the cost of providing reliable electric service and issue a decision based on the evidence presented and within the laws that govern rates.”
An average residential customer using about 1,200 kilowatt hours a month could expect to see a bill of $194, up from $183.
That’s not the last increase customers could see.
Kentucky Power has applied, along with its sister company in West Virginia, Wheeling Power, to construct a $191 million mechanical draft cooling tower at the power plant they jointly operate.
It will cost each company $95.5 million to build the cooling tower, which will replace a concrete structure that is failing.
Kentucky Power customers will pay $4.69 a month if approved by the Kentucky commission, while West Virginia customers will pay $1.22 a month if approved by that state’s regulators.
For Kentucky Power customers, that’s in addition to the $2.33 a month they are paying to maintain the 50% ownership stake in the Mitchell plant in West Virginia beyond 2028.
The Kentucky commission approved that proposal in December.
Additionally, Kentucky Power customers could find themselves paying more in the near term for higher natural gas costs incurred during January’s winter storm.
Lawmakers passed and the governor signed a bill to blunt the impact of the fuel price spike, but not eliminate it.
Kentucky Power, based in Ashland, has about 162,000 customers in 20 eastern Kentucky counties. It is a subsidiary of American Electric Power, which is based in Columbus, Ohio.
