CITIZEN STAFF REPORT
FRANKFORT — Electricity bills will go up for Kentucky Power customers under a final order issued Friday by the Kentucky Public Service Commission in Case No. 2025-00257.
Under the PSC’s order, the average residential customer using 1,208 kilowatt-hours per month will see a $10.76 monthly increase in the first year. The average monthly bill will rise to $194.13, up from $183.37 — a 5.87% increase.
After the first year, an additional 0.76% increase will take effect.
The second-year adjustment stems from a provision that allows Kentucky Power to use certain deferred tax liabilities to reduce rates in the first year through a Deferred Tax Liability Rider, rather than spreading those credits over future years under traditional ratemaking.
“We heard emotional pleas at our public comment hearings from ratepayers,” PSC Chair Angie Hatton said in a press release. “They are angry and scared of the additional financial hardship caused by any potential increase. 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.”
Kentucky Power originally sought a significantly higher increase. In its application, residential customers would have seen an average monthly increase of $27.30, or 14.62%.
The PSC ultimately authorized an increase in total annual revenue of $55,046,220, representing a $40,512,028 reduction from the $95,558,248 requested in the original filing.
The order also restructures residential rates. The PSC states that the new two-tier residential rate design will levelize bills and alleviate some of the high costs borne by customers with the highest usage. Higher usage customers will pay a higher basic customer charge ($38 rather than $24). However, all customers pay a lower volumetric rate for each kWh beyond the first 600 kWh used ($0.156321 per kWh for the first 600 kWh and $0.117555 per kWh thereafter).
The PSC ordered Kentucky Power to undergo an independent management audit reviewing its operations, decision-making processes and its relationship with parent company American Electric Power.
“As utility costs in this country continue to outpace inflation, electricity rates have become an issue for every utility in every state in the past few years, but perhaps none more intense than for this particular company, due in large part to a loss of population, about 12,000 fewer residential customers over the past 14 years, and a 38% decrease in industrial power customer consumption in Kentucky Power’s service territory,” Hatton said. “That has caused the company’s costs to be spread among fewer customers.”
Kentucky Power is a jurisdictional electric utility that generates and purchases electricity that it distributes and sells at retail to approximately 162,511 customers located in all or portions of Boyd, Breathitt, Carter, Clay, Elliott, Floyd, Greenup, Johnson, Knott, Lawrence, Leslie, Letcher, Lewis, Magoffin, Martin, Morgan, Owsley, Perry, Pike and Rowan counties.
The Kentucky Attorney General, the Kentucky Industrial Utility Customers (KIUC), SWVA Kentucky, the Appalachian Citizens Law Center, Kentuckians for the Commonwealth, the Kentucky Solar Energy Society, the Mountain Association, and Kentucky Solar Industries Association (KYSIA) intervened in the case.