Kentucky Power to raise rates by 35%

A number of Eastern Kentucky residents, businesses and elected officials are voicing concern over Kentucky Power’s recent request to raise rates by 35%.  Kentucky Power is part of American Electric Power and serves 175,000 customers across 20 eastern Kentucky counties.

Louisa Mayor Teddy Preston was quoted in the Ashland Daily Independent as saying, “It’s the wrong time. People can barely make it on Social Security. I can understand a smaller rate hike, but not 35 percent.” The mayor also stated on local radio programs that the impact on the city’s budget would be significant, since the community’s water and sewer plant, along with other properties, currently use about $10,000 in electricity each month.

If approved by the Kentucky Public Service Commission, the bill for an average Kentucky Power residential customer would rise from the current price of $114.57 to $154.62. This is based on a monthly usage of about 1,400 kilowatt-hours.

Kentucky Power’s rate request is similar to rate hikes that the parent company AEP has requested in neighboring states. In August of 2008, AEP explained that it was seeking a 45% rate increase for its Ohio customers to cover sharply rising coal prices. “The fact is that coal has doubled in cost in the last year alone, dramatically affecting AEP Ohio’s costs,” an AEP executive said in a statement at the time.

The recent move by Kentucky Power is part of an overall trend among electric utilities in Kentucky, which together produce about 92% of their power by burning coal. Historically, coal has been relatively inexpensive fuel, giving Kentucky an economic advantage. But Kentucky’s residential, commercial and industrial customers are now seeing their utility bills rise due to many factors, including the increasing costs of purchasing fuel, building new power plants, and managing coal’s environmental impacts.

A 2008 USA Today article discussed how these factors were causing utility prices in West Virginia and Kentucky to rise faster than the national average. Industry analysts were quoted in the article saying that residents of coal-dependent states should expect additional rate increases even before the passage of expected carbon regulations. The article closed with a quote from an American Electric Power executive, who stated, “There not a whole lot of reason why the prices would start to temper.”

These trends are an important reason why the member groups of the KY Sustainable Energy Alliance are working to diversify Kentucky's energy portfolio and increase investment in energy efficiency programs. It is time to ramp up efficiency efforts that are already proving successful in other states to help residents and businesses save energy and money.