Kentucky Power Rate Review Settlement Agreement Supports Reliability

Source: 11/20/2023, Location: North America

Kentucky Power, an American Electric Power (AEP) company, filed a settlement agreement with the Kentucky Public Service Commission in its ongoing base rate review.

The settlement agreement paves the way for Kentucky Power to enhance reliability through expanded vegetation management and other distribution programs while reducing customer bill impacts initially proposed. The agreement also includes commitments, such as more than doubling the number of customers eligible for programs designed to assist low-income residential customers. Several groups representing customers worked with Kentucky Power to reach the agreement.

"Kentucky Power customers will benefit from this agreement which will allow us to provide additional services for our most vulnerable customers and improve reliability," said Cindy Wiseman, Kentucky Power president and COO. "The agreement represents a constructive and positive step forward for our customers that was accomplished through a meaningful collaboration between the company and key customer groups. It provides us with a pathway for investing in eastern Kentucky."

Kentucky Power had proposed several customer programs in its initial filing, and additional programs were incorporated into the settlement agreement. The agreement includes:
- Doubling the company's contribution to its residential energy assistance program to expand the number of customers helped from approximately 3,700 under the company's initial proposal to 5,700 customers per year. The company's current residential energy assistance program currently assists approximately 2,700 customer per year.
- More assistance for the most vulnerable residential customers, including dedicating 21% of future energy efficiency programs to low-income customers.
- An optional seasonal tariff to assist customers in addressing high usage during winter months.
- Increased reliability projects, including an expanded rights-of-way widening project, to address the fact that half of outages are caused by trees falling outside of the company's rights-of-way.
- Extending bill due dates from 15 to 21 days.
- Securitization, which is a financial tool that will lower bill impacts related to certain existing costs for all customers.

The settlement agreement requests Commission approval for new rates to be effective in mid-January. The agreement reduces the overall rate impact to residential customers to less than 11%.

In addition, as part of the proposal, the company would suspend recovery of the Decommissioning Rider and portions of the Purchase Power Adjustment tariff until those costs are financed through securitization. Securitization lowers financing costs and extends the length of time over which Kentucky Power will recover these costs, which helps keep monthly bills lower than they would be under the current recovery process.

Parties to the settlement include the Kentucky Attorney General, Kentucky Industrial Utility Customers, Walmart, Steel of West Virginia Kentucky; and a group comprised of consumer advocate groups, such as Kentuckians for the Commonwealth, the Mountain Association, Appalachian Law Center and Kentucky Resources Council. All parties participated in settlement negotiations and signed the agreement, with the Attorney General and Steel of West Virginia signing as non-opposing parties.

The settlement is subject to review and approval by the Kentucky Public Service Commission.
Kentucky Power, with headquarters in Ashland, provides electric service to about 163,000 customers in 20 eastern Kentucky counties, including Boyd, Breathitt, Carter, Clay, Elliott, Floyd, Greenup, Johnson, Knott, Lawrence, Leslie, Letcher, Lewis, Magoffin, Martin, Morgan, Owsley, Perry, Pike and Rowan. Kentucky Power is an operating company in the American Electric Power (AEP) system. For more information, visit

At American Electric Power, based in Columbus, Ohio, we understand that our customers and communities depend on safe, reliable and affordable power. Our nearly 17,000 employees operate and maintain more than 40,000 miles of transmission lines, the nation's largest electric transmission system, and more than 225,000 miles of distribution lines to deliver power to 5.6 million customers in 11 states. AEP also is one of the nation's largest electricity producers with nearly 29,000 megawatts of diverse generating capacity, including approximately 6,100 megawatts of renewable energy. AEP is investing $43 billion over the next five years to make the electric grid cleaner and more reliable. We are on track to reach an 80% reduction in carbon dioxide emissions from 2005 levels by 2030 and have a goal to achieve net zero by 2045. AEP is recognized consistently for its focus on sustainability, community engagement and inclusion. AEP's family of companies includes utilities AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana, east Texas and the Texas Panhandle).

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