As power costs rise, consumer groups say KY regulators should investigate

Public interest groups are calling on Kentucky’s primary utility regulator to launch an investigation into rising power bills in the commonwealth after a series of high-profile investor-owned utility rate hikes this year.

A coalition of seven consumer advocacy law firms, environmental groups and social service organizations signed onto a letter to the Kentucky Public Service Commission this week calling on the small panel to explore the “crisis of rising energy prices” before Kentuckians “are saddled with decades of additional energy costs, including for new large loads for data centers.”

“Affordability is an important issue to all Kentuckians, from residential customers to energy-sensitive industries to the small businesses that are the mainstay of our economy,” the authors wrote. “While there may not be an easy fix, we know that the Commission and ratepayers across the various customer classes share these concerns.”

It’s the latest in an ongoing public pressure campaign to rein in residential energy costs, especially in Central and Eastern Kentucky, where Wall Street-backed energy conglomerates have the exclusive right to serve large swaths of the commonwealth.

Already in 2026, American Electric Power-owned Kentucky Power got the PSC’s blessing on a 6% base residential rate increase for customers across many Appalachian counties. Louisville Gas and Electric and Kentucky Utilities locked in 4.7% and 6.5% respective electricity rate hikes for more than a million customers in 93 Kentucky counties.

Meanwhile, the commonwealth’s energy providers are aggressively courting data center energy brokers in an effort to amass continuous and predictable high-load power demand. That’s sparked an ongoing, grassroots debate among Kentucky residents and small business owners who fear “hyperscale” energy users could strain the grid and leave them footing the bill.

Republican-backed legislation in the GOP-controlled General Assembly that would have forced data center customers to pay for 100% of the power they need stalled in the Senate earlier this year following opposition from Kentucky’s two largest investor-owned utilities. Similar regulatory protections reappeared in the end-of-session funding bill but were pulled out of the bill just hours before the close of session.

Instead, it’s been up to the PSC alone to negotiate out specific contracts with individual utilities to determine how much money data centers will pay for the energy they use. Authors of the letter requesting a PSC energy cost probe said the commission is uniquely positioned to lead that investigation.

“We believe the Commission, the only executive branch agency tasked with providing our legislature information on how to keep utility costs fair, just and reasonable, is ideally situated and statutorily empowered to provide legislators, the public, and other stakeholders with actionable information on how to address the crisis of rising energy prices in our state,” the groups wrote.

The groups include the Appalachian Citizens Law Center, Kentuckians for the Commonwealth, Kentucky Chapter of the Sierra Club, Kentucky Conservation Committee, Kentucky Solar Energy Society, Metropolitan Housing Coalition and Mountain Association.

Their list of recommended topics for the probe include the fair allocation of costs for new demand, performance, based ratemaking, demand-side management and energy efficiency in energy insecurity. They recommended examining low-income rate designs and bill financing, as well as least-cost options for generation and demand-side resources and an assessment of legislation extending the lives of older fossil-fuel resources.

The recommendations also include an assessment of risks on ratepayers of capital investments and the “current and future costs and risks associated with hosting data centers.”

Yet, just as lawmakers failed to pass residential-side protections for energy-hungry data center customers, the Republican supermajority did successfully reshape the structure of the PSC. Legislation adding new members to the three-person panel and imposing qualification and term limits became law without Democratic Gov. Andy Beshear’s signature.

Members of the PSC wield enormous control over the state’s rates for residential and industrial power, water, sewer, gas and telephone services. The PSC regulates Kentucky’s utility providers and is charged with protecting customers, vetting power generation plants and utility sales and rate hikes. It’s also responsible for handling complaints and cases regarding unfair rates, poor quality service or service outages, among other complaints.

Beshear appointed Barry Mayfield to the commission after bill passed. Mayfield, a former Energy and Environment Cabinet official, brings more than 40 years of experience working for customer-owned power cooperatives. The fifth commission seat remains vacant.