KY Power asks for 12% rate hike. It wants to start charging more as soon as March
Kentucky Power wants the option to boost residential and commercial rates while it waits on state regulators to mull a 12% increase the company would enact over the next three years.
The Eastern Kentucky utility owned by American Electric Power Co. Inc. filed paperwork with the Kentucky Public Service Commission to that effect Tuesday. If granted, Kentucky Power says it may begin charging customers more after Sunday, March 1 if a final decision on the wider rate proposal is delayed.
A proposed settlement the company reached with several intervening parties earlier this month would lower Kentucky Power’s initial request for an immediate 14.9% residential increase down to 12.3% spread over three years.
That boils down to an additional $26.40 over current rates the average residential customer would be paying by 2028, according to the settlement agreement. The company would start out with an 8.2%, or $17.58, rate hike this year using 1,210 monthly kilowatt-hours, followed by a little less than $2 more in 2027 and roughly an extra $7 in 2028.
If the PSC grants Kentucky Power’s request to institute the higher rates on an interim basis, the 8.2% average residential increase could go into effect in a little more than a month, but it would be subject to a refund if the PSC denies or modifies the company’s rate-hike structure.
“If the Commission is able to issue its final order shortly after March 1, 2026, then Kentucky Power may not have to implement interim rates, and it will try to wait as long as possible to do so,” the company wrote Tuesday.
Eventually, however, lawyers for the company added, “Kentucky Power’s financial conditional” will require it to implement interim rates while the case remains under review.
Kentucky Power’s latest request follows a string of revenue-generating proposals the utility has sought over the last decade since it retired and converted coal-fired, power-generating units in Lawrence County in 2016.
The variable-rate rider the company has proposed adding to residential power bills would change the percentage increase according to how much energy customers use. That should generate an additional $17.7 million in first-year revenue for the company in addition to the $58.7 million it will earn from base-rate increases.
Nearly all the witnesses the PSC heard from said they opposed the rate hikes and questioned Kentucky Power’s motives, particularly since it’s controlled by AEP, an investor-owned company that posted gross profit increases for the last two years, according to annual cash flow statements.
The company’s latest rate-increase case struck a nerve across the company’s 20-county service region, which prompted the PSC to launch a listening tour across the region to hear how Kentucky Power’s proposed rates would affect customers.
But the energy company has said it needs to recoup infrastructure improvements its made across the commonwealth’s easternmost Appalachian region. Troubling population decline and coal mine closures increases the share of the burden on those residents who still live in the region.
Kentucky, like most states, permits regulated utility monopolies. Kentucky Power is the only electricity provider in the easternmost counties it serves near the West Virginia border. Residents don’t have a choice between providers offering different rates, so the PSC acts as an intermediary to keep companies in check from gouging their customers and other unfair business practices.
Tuesday’s proposed motion marks the second time Kentucky Power has sought the commission’s permission to begin charging higher rates on an interim basis in this case. The company’s August 2025 application floated a rate suspension that would let the 14.9% increase automatically take effect March 1, 2026. The commission denied that request, saying it “anticipates completing this matter prior to the proposed effective date.”
During three days of open-hearing testimony in Frankfort earlier this month, PSC chair Angie Hatton appeared to walk those comments back.
“I don’t know if we’re meeting suspension date,” she told the company Jan. 15. “I don’t know if we are. I think that may still be the goal, but I don’t know that I can promise that.”
The PSC denied Kentucky Power’s request to implement lower, settlement rates subject to refund in a 2023 rate case and rejected a similar strategy in a rate increase proposed by Louisville Gas and Electric/Kentucky Utilities last month.
This story was originally published January 28, 2026 at 2:35 PM.