A utility with 168,000 electricity customers in Eastern Kentucky has worked out a deal to reduce the size of its request for a rate increase.
Under the proposed deal, rates for residential customers of Kentucky Power would go up about 9 percent.
The increase would have been 16 percent under the utility’s original rate request from June, Kentucky Power said in a news release.
“The settlement will help Kentucky Power recover growing costs of providing safe and reliable service to customers and allow us to continue upgrading the electric network to assist in economic growth,” Matthew J. Satterwhite, president and chief operating officer of Kentucky Power, said in the release.
The utility announced the proposed rate settlement this week.
The state Public Service Commission must approve the request.
Two parties that had intervened to oppose the initial request did not sign on to the agreement to reduce the rate increase. Those were the office of Kentucky Attorney General Andy Beshear and the Kentucky Commercial Utility Customers, according to the utility’s release.
Beshear indicated in a tweet that does not support the deal.
“This settlement would just further harm the people of Eastern Kentucky,” Beshear said.
However, most parties that had intervened did agree to the deal for a lower increase, according to Kentucky Power.
Those were the Kentucky School Boards Association, Kentucky League of Cities, Kentucky Industrial Utility Customers, Walmart and the Kentucky Cable Telecommunications Association.
Kentucky Power has said it needs the rate increase because of rising costs and the loss of customers amid the sharp downturn in the coal industry in Eastern Kentucky.
Coal mines are big electricity users, but many mines in the region have shut down since 2011. People have moved away because of the resulting economic downturn, meaning fewer residential customers for the utility.
“The loss of customers is the single-largest driver of this straightforward case,” Satterwhite said of the rate increase in a column in the Herald-Leader in August.
However, the request — just two years after Kentucky Power received a rate increase in 2015 — has caused a good deal of consternation among customers.
“Please consider the elderly and others on fixed incomes and REJECT their proposal,” Pike County resident Carla Pleasant said in a message to the PSC. “Enough is enough. Let them pay their bills the same way the rest of us have to … operating expenses and not a raise every other year.”
“When you aren’t able to buy groceries because of your electric bill, something is very wrong!” Perry County resident Iris Kaye Williams told the agency.
The PSC had not ruled on Kentucky Power’s initial rate request before the utility announced the proposed settlement.
The deal would put the increase on commercial and industrial electricity users at between 3 and 7 percent, down from an initial level of 7 to 14 percent, Kentucky Power said.
The proposed settlement would cut the total amount of money Kentucky Power is requesting to $34.7 million. The original amount was $63.3 million.
The proposal includes a pledge from Kentucky Power not to seek another increase in its base rates until at least 2021 if the PSC approves the deal, according to the release.
One reason Kentucky Power was able to cut the size of its requested increase is that it would defer $50 million in expenses related to generating electricity at a coal-fired power plant in Indiana.
Kentucky Power buys electricity from the plant to serve Eastern Kentucky.
The PSC can accept, modify or reject the proposed settlement. The agency has scheduled a hearing on the request Dec. 6, 7, and 8 at its office in Frankfort.
If the PSC approves the settlement, the new rates would go into effect in January.
Kentucky Power has customers in 20 counties in Eastern Kentucky.