The state Public Service Commission approved a rate increase request from Kentucky Power of about 4 percent on Thursday, but the elimination of a separate surcharge will lower rates overall for most customers.
The decision to allow a rate increase is coupled with a decision to scale back the company’s programs to encourage less energy use, known as demand-side management, which will eliminate a $10.61 average surcharge on monthly bills and replace it with a $1.48 credit.
Overall, electric bills for the company’s 168,000 customers in Eastern Kentucky, where the coal industry’s decline has left thousands without work, will be lower in 2018 than in 2017, according to a PSC news release.
The average monthly bill for a Kentucky Power customer has been $157.83, not including local fees and taxes. That bill will now be $151.45, a 4 percent decrease, according to the commission.
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Kentucky Power originally asked to increase its revenue from base rates by $60.4 million, and later agreed in a settlement to a $31.8 million increase. In the final decision announced Thursday, the PSC approved an increase in revenue from base rates of $12.35 million, $19.45 million less than agreed to in the settlement.
The PSC said it cut $13.9 million from the settlement agreement to account for a recent reduction in the corporate tax rate that utilities must pay.
The company reacted to the announcement Thursday with caution.
“We are reviewing the order and the changes made to the settlement agreement,” said Matt Satterwhite, Kentucky Power’s president and chief operating officer. “We appreciate the commission’s recognition of the many benefits of the settlement agreement terms it adopted. Still, we want to take time to better understand the changes made to the settlement and how those changes affect the terms offered by Kentucky Power.”
The company’s request for higher rates was met with opposition from residents and state officials, and from Attorney General Andy Beshear, although his office filed expert witness testimony supporting an increase of $39.8 million.
Beshear, whose office represents residential customers in PSC rate cases, said his attorneys will review the ruling to confirm that it cuts power bills.
“While a decrease would be good news, I understand utility bills in the AEP/Kentucky Power region are still unaffordable, and I will continue to fight so that no family must decide between feeding their children or keeping them warm,” Beshear said in a statement.
Nine members of the Kentucky General Assembly sent a letter Wednesday requesting that the PSC quickly adjust the company’s revenue requirements to reflect savings from the federal tax cut, and Thursday, they praised the PSC announcement of lower overall rates.
“Congratulations and thank you to the Kentucky PSC for listening to legislators and residents from Eastern Kentucky, and for being willing to develop innovative solutions to make this critical rate reduction a reality,” the lawmakers said in a joint statement. “Today’s announcement by the Kentucky PSC will provide immediate, great relief for Appalachian Kentucky power customers, and it simply could not come at a better time, as a historic cold spell has set down on Eastern Kentucky.”
The PSC also increased a charge by 15 cents to help pay for the Low-Income Home Energy Assistance Program, which helps low-income customers pay their electric bills. Company shareholders match those payments.