Kentucky Power customers will see reduced utility bills under new owners
A $2.8 billion deal to acquire Kentucky Power from American Electric Power was approved Wednesday.
The utility company that provides electricity for 165,000 retail customers in 20 Eastern Kentucky counties will now be owned by Liberty Utilities.
Kentucky Public Service Commission approved the acquisition despite not having enough commissioners to meet the quorum to conduct business. Kentucky Senate did not confirm PSC Vice Chair Amy Cubbage to her role last month or another appointment, leaving the three-person commission with one member, Chair Kent Chandler. Gov. Andy Beshear said the commission could act on the case without a quorum.
Cubbage was involved in the two-day Kentucky Power hearing, saying on Twitter “the citizens and ratepayers of Eastern Kentucky deserve better.”
Liberty promises include:
• It will not file a rate case to raise customer’s rates until January 2024, which was a previous agreement with Kentucky Power.
• It will have local operational control, keeping its headquarters in Ashland and provide customer services by employees who live in Kentucky Power’s service territory.
• It will provide 100 new jobs in Kentucky Power’s service territory and keep current employees. David Swain will be the company’s president. He previously was the president of Liberty Utilities central region.
• It will continue partnerships with economic development leaders. Liberty officials will continue previous economic development commitments for two years.
The purchase price includes the assumption of $1.22 billion in debt. AEP will net $1.4 million in cash after taxes and transaction fees, which will allow the company to reinvest in renewable energy outside of Kentucky. The purchase price also included $585 million, which would be paid by Liberty to AEP.
The Kentucky Attorney General Office and state legislators from the Mountain Caucus told the commission the money AEP gains from the sale should be returned to customers.
In its approval of the acquisition, the Public Service Commission ordered $143 million in benefits to be returned to Kentucky Power rate payers.
“We know rising utility bills have strained the budgets of many Kentuckians, and we appreciate that the PSC adopted modifications to create savings for Kentucky ratepayers before authorizing the sale of Kentucky Power,” Attorney General Daniel Cameron said.
The commission reduced transmission costs for Kentucky ratepayers by $30 million, ensured ratepayers do not pay for more than $43 million in damage repairs resulting from Kentucky’s 2021 winter storms, secured $40 million in Fuel Adjustment Credits for ratepayers and required Kentucky Power to pay 50% of the charges on the Big Sandy Decommissioning Rider.
State Rep. Angie Hatton, a Mountain Caucus member, said it was “fitting” that American Electric Company will have to repay a portion of its profits in its sale of Kentucky Power Company to Liberty Utility Company.
“The PSC order didn’t go as far as my fellow Eastern Kentucky legislators and I would like, but it still means a lot that AEP will have to pay back some of its profits to the people we represent who have been overcharged on their power bills for years,” Hatton said. “Obviously, I wish it was more, but between $113 million and $158 million is still a significant amount of money. I am happy to see this go back to the customers rather than watch AEP walk away with the money as it leaves the state.”
Customers will begin seeing a bill credit in July that will continue for 18 months.
“This decision is a reprimand for AEP for overcharging some of the poorest people in the country and a warning of stricter scrutiny for Liberty Utilities should they attempt the same business practices,” Hatton said. “We still have a long way to go bring electric rates down, but I remain hopeful that better days are ahead.”