The state Public Service Commission approved a settlement granting Kentucky Power Co. a rate increase of 12.5 percent, about half the amount initially sought by the utility. In a separate ruling, the commission rejected a plan by the American Electric Power subsidiary to buy wind-generated power from out of state to serve its 176,000 customers in 20 Eastern Kentucky counties.
The average bill for a typical residential customer would increase about 17 percent, to $134 a month, the commission said in a news release.
Several industrial and citizen-advocacy groups, including Kentucky Industrial Utility Customers and Community Action Kentucky, intervened in the case and agreed to the settlement. Pike Senior Citizens Programs was granted partial intervention authority and did not agree to the settlement because, it said, the rate increase would disproportionately affect private residents as opposed to businesses.
"We appreciate and sympathize with Pike Senior Citizens, other organizations and all of the ratepayers affected by our decision in this matter," the PSC said. But it found that Kentucky Power's revenue from residential customers does not cover its cost of serving those customers. With the rate increase, residential service will continue to be Kentucky Power's least profitable customer class, the PSC found.
Kentucky Power had planned to spend $14.5 million on a 20-year contract to buy wind power from Illinois.
Attorney General Jack Conway and Kentucky Industrial Utility Customers urged the PSC to reject the wind-power contract, saying it was a needless expense.
The PSC rejected the proposed contract 2-1. Chairman David Armstrong and commissioner Charles Borders said the PSC cannot approve a power purchase that is not immediately needed and is more expensive than current power sources.
Vice chairman Jim Gardner said the wind power contract should be approved. Gardner said requirements for renewable power are likely, and buying wind power now would lead to cost savings over the long term.