PSC reduces Ky. Power rate hike; monthly bills to decrease by 4 percent

Published 9:52 am Friday, January 19, 2018

FRANKFORT (KT) — The Kentucky Public Service Commission has trimmed a rate hike request by Kentucky Power, meaning residential customers will be paying less in 2018 for electricity.

According to the PSC, an average monthly residential bill has been $157.83, a figure that includes base rates and all surcharges, but not local government fees and taxes. That same bill now will be $151.45, a decrease of $6.38, or about 4 percent. Individual bills will vary with usage.

Approximate average monthly usage for Kentucky Power residential customers is 1,300 kilowatt-hours. A kilowatt-hour is the amount of electricity used by a 100-watt lightbulb in 10 hours.

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Kentucky Power had sought to increase its annual revenue from base rates by $60.4 million, or about 11 percent. The utility later reached a settlement agreement with most of the parties to the rate case on an increase of $31.8 million. The Kentucky Office of Attorney General, which did not participate in the agreement, filed expert witness testimony supporting a revenue increase of $39.8 million.

“We are reviewing the order and the changes made to the settlement agreement,” said Matt Satterwhite, Kentucky Power 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 PSC granted Kentucky Power an increase in revenue from base rates of $12.35 million, a reduction of $19.45 million from the amount in the settlement. The PSC’s lower figure is largely the result of a reduction of $13.9 million to account for the effect of federal corporate income tax rate cuts that went into effect Jan. 1. The remainder of the PSC’s reduction from the settlement figure comes through other adjustments, mostly to the recovery of purchased power costs.

The agency also rejected Kentucky Power’s proposal to revise its bill format to eliminate line items detailing various surcharges and riders. The PSC ordered that the line items be retained in the interest of transparency for ratepayers.

A sagging economy in Kentucky Power’s service territory had led to decreased demand for electricity, a fact subsequently cited by the company as a reason for seeking a revenue increase. The PSC noted at the time that the economic conditions also exacerbated the difficulty many customers have in paying their bills.

On Dec. 28, the PSC issued orders to all for-profit utilities in Kentucky, telling them to track their savings under lower corporate tax rates that took effect Jan. 1, going from 35 percent to 21 percent, paving the way for those savings to be passed on to customers in the form of lower electric, gas or water rates.

Nine Republican House members from Eastern Kentucky sent a letter to the PSC on Wednesday, asking them to review the rate hike.

In the letter, the representatives said a rapid response from the PSC is prudent, “as the winter months in Eastern Kentucky are a particularly critical time for many residents. Reductions to utilities’ federal income taxes will allow the company to lower power rates, and ease the financial strain on customers in Appalachia.”

The letter was signed by Reps. Jill York of Grayson, Chris Fugate of Chavies, David Hale of Wellington, Danny Bentley of Russell, Tim Couch of Hyden, Larry Brown of Prestonsburg, John Blanton of Salyersville, Scott Wells of West Liberty and Toby Herald of Beattyville.