Eastern Kentucky ratepayers for investor-owned electric utility Kentucky Power will see an increase in electricity rates for the second time in three years, although the size of the increase was reduced by the state’s utility regulator after hearing “emotional pleas” from Kentuckians.  The Kentucky Public Service Commission announced in a Feb. 28 press release that residential Kentucky Power ratepayers in the first year of the approved rate increase will see an average utility bill increase of $10.76 per month, meaning the average monthly bill will grow from $183.37 to $194.13.  That will be a 5.87% increase in residential rates for the first year, according to the regulator. Rates would increase by an additional 0.76% in the second year of the rate increase because of a mechanism, approved by the commission, where Kentucky Power would defer tax liabilities to help reduce rates.  Kentucky Power, an affiliate of Ohio-based American Electric Power that serves approximately 162,000 ratepayers in Eastern Kentucky, originally asked for a rate increase of more than 14%. If approved, it would have grown the average residential utility bill by $27.30 per month, to more than $210.67. Kentucky Public Service Commission chair Angie Hatton, a former Democratic state lawmaker who represented a part of Eastern Kentucky, in a statement said the loss of population in the Eastern Kentucky counties that Kentucky Power serves and loss of power consumption from industry has “caused the company’s costs to be spread among fewer customers.”  “We heard emotional pleas at our public comment hearings from ratepayers. They are angry and scared of the additional financial hardship caused by any potential increase,” Hatton said. “The PSC must balance the interests of fair rates for all customers with the realities of the cost of providing reliable electric service and issue a decision based on the evidence presented and within the laws that govern rates.”  With the rate increase, the regulator is requiring Kentucky Power to undergo an audit to “focus upon Kentucky Power’s operations and decision making, and relationship with AEP” to find potential benefits for the utility’s ratepayers.  Republican Kentucky Attorney General Russell Coleman requested such an audit and also asked the commission to deny any rate increase for Kentucky Power. The commission approved a rate increase for Kentucky Power in 2024, when it also reduced the amount of the requested increase. A Franklin Circuit Court judge subsequently ruled that Kentucky Power could collect a portion of the rate increase it had been denied.  The commission did not increase Kentucky Power’s rate of profit that it can earn on its investments, called return on equity, or ROE. Kentucky Power had originally asked for an ROE of 10%; the commission approved keeping the ROE of 9.75%.  Sarah Lynch, a Kentucky Power spokesperson, in a statement said the utility is reviewing the order and 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.”  “Our responsibility to serve Eastern Kentucky does not change. We have made significant investments in reliability, vegetation management, system hardening and technology upgrades, and we remain committed to maintaining safe and reliable service,” Lynch said. The regulator also approved a new rate design for residential ratepayers who use a large amount of electricity, meaning ratepayers will pay an increased base charge of $38 on their bills but will see a lower charge per kilowatt-hour for electricity when a customer uses more than 600 kilowatts-hours during a billing cycle. Some of the poorest Kentucky Power ratepayers pay the most in electricity bills during the winter because of energy-inefficient housing.  The post State regulator approves reduced increase in Kentucky Power rates following ‘emotional pleas’ appeared first on The Lexington Times. ...read more read less