Eastern KY residents already have some of state’s highest power bills. They may go higher
The largest power company in Eastern Kentucky — where power costs are already some of the highest in the state — is seeking a 18.3% increase on the power costs for its residential customers.
Last week, Ashland-based Kentucky Power formally submitted an application for approval of the rate increase to the Public Service Commission, the state panel that regulates utilities. The lengthy approval process could take months and would involve public comment and hearings. If approved, the rate changes would take effect in 2024.
According to state data that tracks energy affordability, much of the area that Kentucky Power serves already has some of the highest electricity rates in Kentucky. In 2020, the average bill in Boyd County, where the power company is based, cost about $147 per month. Fayette County’s average bill during that time was $27 cheaper.
Much of the company’s service territory also has some of the state’s higher poverty rates. U.S. Census data puts the state’s overall poverty rate at 16.5%. In Pike and Perry counties — both served by Kentucky Power — close to 30% of the population lives below the poverty line.
“I don’t see how people are doing it,” said state Sen. Robin Webb, a Democrat whose district includes much of the Ashland area. Webb said she is a customer of the company as a resident, business owner and landlord.
Her mother, who is on a fixed income, is also a Kentucky Power customer and her bill is “unconscionable at this point,” Webb said.
Kentucky Power is hoping to use a financing tool called “securitization” to “lessen the bill impacts for customers,” said Sarah Nusbaum, a Kentucky Power spokesperson, in an emailed statement.
A new law passed by the state legislature this year allows utility companies to use securitization to recoup costs lost in extreme weather events or the closing of power plants, the company’s website said. The actual amount of savings generated with the financial tool won’t be known until after it is executed.
In filings with the PSC, Kentucky Power said the reasoning behind the rate increase is to help the company cover fixed costs associated with supplying electricity across the region. Continued population decline locally and the loss of customers in recent years has pushed the company to look toward existing customers to cover costs. The company last sought a rate increase in 2020 and currently serves about 165,000 customers across 20 counties.
Between 2008 and 2022, the company has lost over 10,000 customers, including large business customers which have closed in recent years like AK Steel and Our Lady of Bellefonte Hospital, wrote Cynthia Wiseman, the president and COO of Kentucky Power, in written testimony provided to the PSC.
“The loss of those customers also represents a loss of jobs in the area, which may have precipitated other customers relocating outside of the Company’s service territory to find job opportunities,” Wiseman wrote in the testimony. “These declines unfortunately follow a now long-term trend in the area and include a dramatic loss of coal mining jobs that began in the early 2000s.”
Webb said she understands what the company is facing and added that Kentucky Power has been a “good community partner” when it comes to local economic development.
Some programs, like the federally funded LIHEAP, helps some low-income families with paying for home cooling and heating. According to the program’s Kentucky website, much of that funding is doled out only in the coldest parts of the year.
“We understand an increase — no matter how big or small — is not welcome news, but we are committed to providing reliable electric service for the best rates possible,” the company’s webpage about the proposed rate increase said.
Kentucky Power also offers payment assistance programs and said on its website that more funding for those programs was part of their application. They also will look at introducing an optional tariff for high usage in the winter, expanding programs that clear trees that threaten reliability and extend bill due dates from 15 to 21 days.
The company has also faced other headwinds lately. The PSC last month threatened Kentucky Power with fines over its performance during frigid winter storms last December. Nusbaum said the company “respectfully” disagrees with the PSC’s decision in that case and will be addressing it in an upcoming filing. American Electric Power, the parent company of Kentucky Power, also had to back out of a $2.8 billion sale of the Kentucky company in April.
From a legislative standpoint, Webb said the main things they can do to help is “beef up” assistance programs and continue looking into alternative energy sources.
“We’re looking at everything we can do to assist our suppliers, but also protect our consumers,” Webb said. “And it’s just very frustrating.”
In extreme heat and cold, Webb said she “fears for my constituents’ lives,” adding that two people died in Boyd County when power went out during an ice storm in 2021.