October 4, 2017
Why is Kentucky Power seeking a rate review from the Kentucky Public Service Commission?
Kentucky Power is facing challenges on several fronts. Industrial, commercial and residential customers are declining because of a struggling regional economy. Since September 2014, Kentucky Power has lost more than 2,000 residential customers and about 450 industrial and commercial customers, resulting in a 14.2 percent decrease in electricity usage.
While the number of customers has decreased, our costs have not. The costs of providing safe, reliable service, upgrading the electric network, and complying with environmental regulations have all increased. These growing costs are now paid by fewer customers, resulting in higher costs for all.
How much is Kentucky Power requesting in its filing with the Public Service Commission?
Kentucky Power has submitted an updated application to the Kentucky Public Service Commission to adjust the company’s base rates by about 11.43 percent overall. The new application was filed in August after Kentucky Power successfully refinanced some long-term debt. The adjusted application lowers Kentucky Power’s original rate request filed in June from $69.6 million to $63.3 million. Along with lower riders, this update passes $8.1 million in savings to customers.
How much will residential rates increase?
Increases for individual customers will vary depending on each customer’s usage. For example, average residential customers using 1,247 kilowatt-hours (kWh) per month would see an estimated increase of about $20 per month to $162.88. This is about 66 cents a day. When compared to the industry standard of 1,000 kilowatt-hours, a residential customer would see a monthly increase of about $17 to $133.25, or 58 cents a day. The overall requested residential increase is 15 percent.
What is the average increase commercial and industrial customers can expect?
Commercial and industrial customers can expect an increase of about 7 to 14 percent, based on usage.
Why is the commercial and industrial percentage charge different from residential customers?
It has been Kentucky Power’s longtime practice to use industrial and commercial customer revenues to supplement residential rates and keep costs down. Unfortunately, as commercial and industrial customers have left the area, residential customers must now take on an increased proportion of the costs. The lower charge for commercial and industrial customers is a small step toward reducing the subsidy.
When will the new rates go into effect?
New rates likely will go into effect in mid-January 2018, pending Commission approval.
What is Kentucky Power doing to keep its rates from increasing again in the future?
As a community partner, Kentucky Power works diligently to manage its budgets, staff and expenses. For example, to cut costs we are discontinuing an employee discount program and passing the savings to customers. We work every day to provide customers with programs and services to keep their bills low. The regulatory rate review also includes a $6.8 million reduction in tree trimming spending to keep the increase as low as possible. In addition, we are investing heavily in economic development to attract new businesses and industries. In recent years, Kentucky Power has invested $2.5 million in economic development projects.
Why is Kentucky Power taking a leading role in economic development?
At Kentucky Power, we believe it is important to take a leading role in economic development in eastern Kentucky. We know that one of the best ways to bring costs down for individual customers is to increase the number of customers sharing the fixed costs. When Kentucky Power invests in economic
development, we can help attract large commercial and industrial customers to the region. We are investing in programs that will help retrain former coal miners to ensure that a skilled workforce is available for companies that relocate or expand in eastern Kentucky. When new businesses come to our area, customers gain jobs, the government gains taxpayers and we gain new industrial and residential customers. These efforts help control costs for everyone, and we are beginning to see success.
One successful example is Kentucky Power’s work with state and local leaders to help bring Braidy Industries to eastern Kentucky. Kentucky Power recently joined Gov. Matt Bevin as Braidy announced its plans to employ 550 full-time workers and 1,000 construction workers at the Greenup County site.
Does Kentucky Power offer any programs to help customers manage their bill?
Yes. Kentucky Power offers several energy efficiency programs designed to help customers lower their bill and use less energy. For example, Kentucky Power supports Community Action of Kentucky, which offers weatherization to help low income families lower their energy use. Also, we have asked the Commission to allow us to increase our contribution to an energy assistance program for those in need.
The most important thing customers having trouble paying their bill can do is contact us. We want to help. Every day, we work with customers in our communities who are having issues paying their bill. We can set up payment arrangements, or help them enroll in the Average Monthly Payment plan, which allows for a rolling 12-month average bill to even out winter heating and summer cooling bill spikes.
Who can I contact for more information?
We encourage customers to contact us to discuss any issues. We are available anytime at 1-800-572-1113. Information is posted on our website at www.kentuckypower.com. The request is Case No. 2017-00179 before the Kentucky Public Service Commission. All filings in the case are posted at http://psc.ky.gov/.
What are customers getting with this rate review?
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Additional investments in economic development and workforce training. These investments help attract new commercial and industrial customers to the region. Efforts include reinvesting in our communities to attract new businesses that can employ former coal miners by transitioning them to other industries, such as metal fabrication and aerospace and automotive manufacturing.
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Increased contributions to the Home Energy Assistance Program (HEAP). This program assists low income customers.
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New investments in Kentucky Power’s transmission and distribution systems. This spending will assure safe, efficient energy delivery to homes, businesses and communities.
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Continued focus on service reliability with efficient vegetation management programs.
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Establish a mechanism to potentially avoid large increases in the future by adding costs gradually
over the years as they are incurred.
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A companion filing will provide a simplified bill. Customers will receive a redesigned bill that
streamlines many line items into base rates. The new bill will be easier to read and understand.
What is a base rate?
Base rates reflect the costs of building, maintaining and operating Kentucky Power’s electric system, including power plants, transmission and distribution lines and facilities to serve customers.
This video explains a rate case: https://www.youtube.com/watch?v=oYYZulntmrg.What’s next?
Any rate change must be approved by the Kentucky Public Service Commission. The Commission and its staff will review our filings. Public meetings are scheduled for November 2 in Prestonsburg, November 6 in Hazard and November 8 in Ashland. A hearing before the Commission is scheduled for December 6, 7 and 8 in Frankfort.
