Controversial EKY power rate increase approved. Here’s how much more you will pay
Eastern Kentucky power bills will go up this month, but regulators have nearly cut in half the total revenue Ashland-based Kentucky Power hoped to generate.
Average residential customers in 20 of Kentucky’s easternmost counties will pay $10.76 more per month in 2026, plus another few extra cents in 2027, according to an order the Kentucky Public Service Commission issued Saturday in the highly controversial rate case.
That roughly 6% residential base-rate increase will bring in an additional $55 million in annual Kentucky Power revenue, down more than $40 million from the $96 million it sought in its original application.
The PSC OK’d a deferred tax liability funding mechanism the company proposed in its settlement agreement, plus a two-tiered rate design intended soften the blow on some its largest residential customers.
American Electric Power Co. Inc.-owned Kentucky Power has faced sharp criticism since it first proposed a nearly 15% rate hike on the rural, mostly impoverished region where it is the sole electric utility. Eastern Kentuckians pay the highest electricity bills in the state.
Customers and public officials have blasted the company for posting near-record profits on the backs of Appalachian ratepayers suffering the collapse of a once-prosperous coal economy. Yet, Kentucky Power, also feeling the economic squeeze, has insisted it needs more revenue to upgrade severe weather-resistent equipment and extend its aging generation capacity.
“As utility costs in this country continue to outpace inflation, electricity rates have become an issue for every utility in every state in the past few years, but perhaps none more intense than for this particular company,” PSC Chair Angie Hatton said in a statement to the media.
Kentucky Power has lost some 12,000 residential customers over the past 14 years and 38% of its industrial power base, Hatton said.
“That has caused the company’s costs to be spread among fewer customers,” she added.
The substantially lower $55.1 million revenue requirement Kentucky Power was limited to under the order “creates financial pressure relative to our forecast,” a company spokesperson told the Herald-Leader Monday. The company is still analyzing the order and calculating long-term implications.
“Our responsibility to serve Eastern Kentucky does not change,“ communications manager Sarah Nusbaum said. “As we review the order, we will evaluate the pace and prioritization of future investments to ensure we operate as efficiently as possible while continuing to meet our service obligations while maintaining the financial integrity of the company.”
Nusbaum emphasized significant investments the company has made in reliability, vegetation management system hardening and technology upgrades. She said the company will remain committed to maintaining safe, reliable service.
During a series of emotional public listening sessions the three-member panel hosted around Eastern Kentucky this winter, those customers told commissioners they felt as if they were being punished for staying in the region.
In a rare rebuke last month, Kentucky Attorney General Russell Coleman called on the PSC to reject Kentucky Power’s proposed rate increase altogether, accusing the company of taking advantage of Eastern Kentuckians in the same way mining companies have extracted resources and abandoned those same residents for generations.
Since 2020, Kentucky Power has repeatedly sought the PSC’s permission to boost rates it says are essential to maintaining reliability, recovering investments and offsetting mounting losses. Coleman put the blame for that squarely at the feet of Kentucky Power and AEP decision-makers.
Despite the attorney general’s claims, there is “no evidence” every rate adjustment Kentucky Power has sought recently boils down to “errors in planning management, or execution,” the PSC’s Feb. 28 order says. Nor, does the record support a finding that every rate change was unlawful.
Barring that, the PSC said, state law is clear: “Kentucky Power is entitled to recover its costs and a reasonable return.”
“Kentucky Power’s territory is plagued by economic difficulties,” the commission wrote. “It has no control over customer density and general topography that can lead to higher costs to extend, operate, and maintain service to customers. Nonetheless as the monopolistic electric utility granted an exclusive territory, Kentucky Power has a duty to the customers of the territory to provide safe, reliable and sufficient service at reasonable prices.”
The AG’s office did not immediately respond to a request for comment Monday.
Yet, the PSC did heed one of the attorney general’s last minute pleas. In its order, the utility regulator instructed Kentucky Power to undergo an independent management audit to review operations, decision-making processes and the relationship it has with AEP.
Regulators “reluctantly” signed off on the company’s request to reinvest in an aging West Virginia coal-fired power plant late last year, citing the Eastern Kentucky utility’s failure to plan for and acquire alternative resources. The PSC had already instructed the company to divest its interest in the plant in 2021, suggesting officials had intentionally dragged their feet during the intervening years to force the PSC’s hand.
That same year, the commission opened a still-ongoing investigation into the company’s management and ownership of West Virginia assets.
In its official response to the AG’s demands earlier this year, Kentucky Power said it did not oppose a “reasonable” audit, so long as it does not re-litigate years worth of past commission findings.
Nusbaum said the goal of an independent audit will be to identify efficiencies that benefit customers, which the company welcomes.
On Saturday, the PSC said it was particularly concerned that, during testimony, Kentucky Power President and Chief Operating Officer Cynthia Wiseman was unable to articulate whether certain internal process decisions were made by Kentucky Power or AEP.
“We heard emotional pleas at our public comment hearings from ratepayers,” Hatton said in the news release. “They are angry and scared of the additional financial hardship caused by any potential increase.”
This story was originally published March 2, 2026 at 12:32 PM.
