News
The Kentucky Public Service Commission and the Kentucky Attorney General’s office made the claim in a complaint filed this week against American Electric Power and several subsidiaries, including Kentucky Power.
Kentucky Power, based in Ashland, has about 162,000 residential and business customers and covers all or part of 20 counties in Eastern Kentucky.
The issue in the complaint is how AEP allocates the costs of some construction projects among customers.
Under the process the utility uses, rates paid by customers in Kentucky help pay the cost of building lines and substations in other states, Attorney General Russell Coleman and Angie Hatton, chair of the Public Service Commission, said in a news release.
Between 2017 and 2022, Kentucky Power customers subsidized an estimated $66 million worth of transmission investments in other states, meaning they paid higher bills to finance improvements for other AEP customers, Coleman and Hatton said.
“American Electric Power and its subsidiary have ignored our calls for change and taken resources out of this region to turn a profit in other states,” Coleman said in the release. “We refuse to allow this fundamental unfairness to go on any longer.”
Cindy Wiseman, president of Kentucky Power, issued a release Thursday saying the company “strongly disagrees” with the claims in the complaint.Kentucky Power has customersin Boyd, Breathitt, Carter, Clay, Elliott, Floyd, Greenup,Johnson, Knott, Lawrence, Leslie, Letcher, Lewis, Magoffin, Martin, Morgan, Owsley, Perry, Pike and Rowan counties.
“Kentucky Power is one of the smallest affiliates of AEP and its 20-county service territory encompasses some of the country’s poorest people, yet its ratepayers pay the highest rates of all the AEP affiliates” in a regional power-transmission organization, Hatton said in the release.
Hatton said the goal of the complaint filed this week is to prevent Kentucky Power customers “from being overcharged for transmission infrastructure costs from affiliates in other states while never seeing the benefit of adequate transmission infrastructure investment in Kentucky Power territory.”
The projects involved in the complaint are called “self-planned” projects, which typically means projects planned locally by a utility, not a larger grid operator.
Transmission projects in other states aren’t sufficiently connected to AEP’s service area in Kentucky to justify having customers here help pay for them, the complaint says.
The “misallocation” of costs to Kentucky Power customers for projects outside the state makes it more difficult for Eastern Kentucky to compete for industry and jobs, the complaint says.
The complaint asks the Federal Energy Regulatory Commission to overturn the way AEP allocates costs for self-planned projects so that only customers in the territory where a project is needed would pay for it.
The complaint also asks that the federal commission establish a refund for Kentucky Power customers.”
The Attorney General’s Office and the Public Service Commission filed the complaint Wednesday.
Kentucky Power said in its release that the company has demonstrated that its customers benefit from transmission investments both in and outside Kentucky.
“A strong transmission grid provides our customers and communities with increased reliability and access to low-cost generation resources,” said Wiseman, the Kentucky Power president.
The company also said it is not true that its rates are the highest in Kentucky, and in fact are lower now than in 2022, the year cited in the release from Coleman and Hatton.
The head of AEP has visited Kentucky several times to learn about the system, discuss ideas to reduce rates and and look at ways to help with economic development in Kentucky Power’s service area, Wiseman said in the release.
“Kentucky Power and our more than 235 employees want our 162,000 customers to benefit from economic development opportunities in the region, and electric infrastructure is an important piece of that puzzle,” Wiseman said.
The utility has offered ways to lower customers’ bills and will continue to look for those opportunities, the statement said.American Electric Power, headquartered in Columbus, Ohio, said it operates the largest electricity transmission in the country, with more than 225,000 miles of lines and 5.6 million customers in 11 states.
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