Rate increase coming for Kentucky Power customers

FRANKFORT, Ky. (WYMT)— The Kentucky Public Service Commission (PSC) issued its final order in a controversial Kentucky Power rate case that’s angered customers and local officials.

Under the PSC’s final order, the average residential customer will see an average monthly energy bill increase of $10.76 in the first year. This represents an increase of approximately 5.87% percent for the first year, and there will be an additional 0.76% increase after the first year.

The PSC says the reason for the slight rate increase after the first year is a provision that allows Kentucky Power to use certain deferred tax liabilities to reduce rates. This mechanism, called a DTL Rider, will use those credits to reduce customer bills in the first year rather than in the future as under traditional ratemaking.

In the company’s original application, residential customers would have seen an average monthly energy bill increase of $27.30, resulting in an average bill of $210.67, up from an average bill from base rates of $183.37. This would have represented an increase of approximately 14.62% percent.

The final order also requires Kentucky Power to undergo an independent management audit to review Kentucky Power’s operations, decision making processes, and its relationship with its parent company, American Electric Power, with the goal of identifying potential efficiencies that will benefit customers.

“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, due in large part to a loss of population, about 12,000 fewer residential customers over the past 14 years, and a 38% decrease in industrial power customer consumption in Kentucky Power’s service territory. That has caused the company’s costs to be spread among fewer customers,” said PSC Chair Angie Hatton. “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.”

A copy of the final order and the complete record of the case including the application, public comments, and other case filings are available at https://psc.ky.gov/Case/ViewCaseFilings/2025-00257.