OP-ED
Kentucky Power Company Customers Can’t Get a Break on Rate Increases
Carrie Ray is the Director of Energy Programs at the Mountain Association
Kentucky Power Company customers can’t seem to get a break. With base rate increases about every two years, and smaller hits in between, residential customers have seen their rates go up by almost 50% compared to ten years ago. Small commercial customers’ rates have gone up 32-37%, and their demand rate, which is an additional charge for the highest amount of power they use at one time, has gone up a whopping 410%. And now Kentucky Power is asking for more.
Mountain Association, the nonprofit organization where I work, supports small businesses, nonprofits, and local governments who want to lower their energy bills through efficiency and renewable energy upgrades. Through this work, we have usage information from the accounts of over 550 Kentucky Power clients we have served. We analyzed what this rate increase would mean for our clients based on their electricity use and found they would have to spend over $1.5 million more per year in electric costs – not including increases from taxes and surcharges.
That’s $1.5 million that won’t be used for hiring new employees, growing a business, providing health care, educating students, serving meals to the elderly, or paying police officers. One grocery store in an isolated community would have to pay over $11,000 more per year, even after they’ve invested in efficiency and solar for their store. Greenup County Schools would see an increase of over $48,000 per year for just three of their seven schools. Another county government would see an increase of over $35,000 per year.
This is money that most Eastern Kentuckians simply do not have. Energy burden is a term for what percent of a household’s income goes to paying energy bills, and Appalachian Kentucky has some of the heaviest burdens in the country. Leslie, Letcher, and Martin Counties, which are mostly served by Kentucky Power, have energy burdens of over 6%, twice the state average. Kentucky Power’s residential and small commercial customers already pay the highest electric rates in the region without factoring in the surcharges and fees, which can add 10-15% to the bill.
It is true that Kentucky Power faces unique challenges compared to other utilities in Kentucky. Unlike Kentucky Utilities, they serve a more rural population, which means they pay more per customer in infrastructure costs. Unlike rural electric cooperatives, Kentucky Power is a for-profit company so they must make money for their shareholders. In fact, one of the reasons they are seeking such a large increase is that, as of May 2025, Kentucky Power was not earning enough profit for their investors. However, their parent company, American Electric Power saw third quarter earnings of nearly a billion dollars.
Kentucky Power points to declining load (which means less demand for electricity) as another reason they need to raise rates – as population declines, they’re selling less power. But continually raising rates will cause more businesses to close and more residents to move away, adding to an already steeply declining population trend. Large industrial users may be able to get special rates from a utility, but residents and small businesses don’t have that kind of bargaining power.
We applaud Kentucky Power’s recent investments in energy efficiency programs for homes and businesses, including rebates and energy audits for residential customers, but it’s not enough to offset the increasing unaffordability of rates. We are at a crisis point and business as usual won’t cut it anymore. We need new ideas and innovative programs like virtual power plants, pay-as-you-save efficiency programs, and distributed solar that will help ratepayers lower their bills while also providing the utility with lower-cost resources they need to meet customers’ electricity needs. In fact, a new statewide report shows that a transition away from continued reliance on coal and gas and towards efficiency and renewables would save Kentuckians billions of dollars.
The Public Service Commission is required to consider a request for a rate increase if the utility can prove they are not making their needed revenues and approved return on equity for their investors. However, they can – and must – scrutinize the decisions and investments that have led Kentucky Power to this point, so we don’t find ourselves spiraling further in the same direction with new increases proposed again two years from now. Eastern Kentucky cannot afford it.
Building a new economy, together.
Carrie Ray is the Director of Energy Programs at the Mountain Association. She can be reached at carrie@mtassociation.org.
I could tell you a lot about Kentucky Power that you would like to know.