Company explains request for rate raise
ASHLAND, Ky., June 28, 2017 – Kentucky Power on Wednesday filed an application to the Kentucky Public Service Commission in Frankfort to seeking a regulatory review of base rates. If approved, new rates could go into effect in January 2018.
The new rates are necessary due to a decrease of about 2,000 residential and about 450 industrial and commercial customers because of a struggling regional economy. In three years, Kentucky Power has experienced a 14.2 percent drop in kilowatt usage because of the loss. While confronted with increasing operating costs and ongoing environmental expenses, Kentucky Power seeks to close the growing gap between the decline in its customer base and operating expenses.
“We realize no one likes higher bills but I sincerely believe the rate adjustment is necessary to continue Kentucky Power’s reliable electric generation and high-quality customer service as well as our efforts to support economic development and return jobs to the region,” said Kentucky Power President, Matt Satterwhite. “As a community partner, I’m proud that we have been a part of efforts to bring industry here. When we do that, we lessen the financial burden on individual customers, while bringing in dollars that can be used to invest in improving our electric service for all.”
Kentucky Power filed testimony supporting an increase of about $69.6 million overall through base rates, riders and the environmental surcharge. Residential customers using an average 1,247 kilowatt-hours per month would see an estimated increase of $24 per month or about 80 cents a day. Using the industry standard of 1,000 kilowatt-hours, a residential customer would see a monthly increase of about $20 or 67 cents a day. Rates for commercial and industrial customers would increase 8 to 15 percent, based on usage.
The proposed increase will help fund:
* Additional investments in economic development and workforce training. Initiatives from Kentucky Power will help put former coal miners back to work by transitioning them to other industries, including metal fabrication, and aerospace and automotive manufacturing.
* Increased contributions to the Home Energy Assistance Program (HEAP) to assist low income customers.
* New investments in Kentucky Power’s transmission and distribution systems to assure safe energy delivery to homes, businesses and communities.
* Continued focus on service reliability with efficient vegetation management programs.
* Establish a mechanism to potentially avoid large increases in the future by adding costs gradually over the years as they are incurred.
* A companion filing will provide a simplified bill. Customers will receive a redesigned bill that streamlines many line items into base rates. The new bill will be easier to read and understand.
The Commission will determine if the new rate is adopted after a period of testimony and public comment. The Commission has six months to review the filing, ask questions, and schedule hearings.
Success from Kentucky Power’s investments in economic development is already being seen. In April, Braidy Industries announced the location of a $1.3 billion aluminum rolling mill in Greenup County. The mill is expected to employ 550 workers with average salaries and benefits of $70,000, as well as another 1,000 construction workers during construction, which is set to begin in 2018. When the mill goes online in 2020, its electricity demand is expected to be 60 MW. Braidy’s president has said the decision to come to eastern Kentucky was due in part to economic incentives offered by Kentucky Power.
“Job No. 1 is to provide safe, reliable electric service at the lowest reasonable cost,” Satterwhite. “I believe a large part of providing that service is through our economic development efforts. Kentucky Power plays a valuable role in bringing good paying jobs to eastern Kentucky, while growing our customer base. It is a win-win.”
Kentucky Power also offers several diverse programs designed to help customers pay their electric bills and lower their bills by reducing their energy consumption. For example, the Whole House Efficiency Program can help customers identify areas of their home that may be losing valuable energy. Kentucky Power also offers extensions and payment plans designed to get customers through difficult times.
Kentucky Power provides service to about 168,000 customers in 20 eastern Kentucky counties. It is an operating company of American Electric Power (NYSE: AEP), one of the largest electric utilities in the United States, delivering electricity and custom energy solutions to nearly 5.4 million customers in 11 states. AEP owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP also operates 224,000 miles of distribution lines. AEP ranks among the nation’s largest generators of electricity, owning approximately 31,000 megawatts of generating capacity in the U.S. With headquarters based in Columbus, Ohio, AEP also supplies 3,200 megawatts of renewable energy.