ASHLAND, Ky. — Kentucky Power, an American Electric Power company, filed a settlement agreement with the Kentucky Public Service Commission today in its ongoing base rate review.
The settlement agreement paves the way for Kentucky Power to enhance reliability through expanded vegetation management and other distribution programs while reducing customer bill impacts initially proposed. The agreement also includes commitments, such as more than doubling the number of customers eligible for programs designed to assist low-income residential customers. Several groups representing customers worked with Kentucky Power to reach the agreement.
“Kentucky Power customers will benefit from this agreement which will allow us to provide additional services for our most vulnerable customers and improve reliability,” said Cindy Wiseman, Kentucky Power president and COO. “The agreement represents a constructive and positive step forward for our customers that was accomplished through a meaningful collaboration between the company and key customer groups. It provides us with a pathway for investing in eastern Kentucky.”
Kentucky Power had proposed several customer programs in its initial filing, and additional programs were incorporated into the settlement agreement. The agreement includes:
- Doubling the company’s contribution to its residential energy assistance program to expand the number of customers helped from approximately 3,700 under the company’s initial proposal to 5,700 customers per year. The company’s current residential energy assistance program currently assists approximately 2,700 customers per year.
- More assistance for the most vulnerable residential customers, including dedicating 21% of future energy efficiency programs to low-income customers.
- An optional seasonal tariff to assist customers in addressing high usage during winter months.
- Increased reliability projects, including an expanded rights-of-way widening project, to address the fact that half of outages are caused by trees falling outside of the company’s rights-of-way.
- Extending bill due dates from 15 to 21 days.
- Securitization is a financial tool that will lower bill impacts related to certain existing costs for all customers.
The settlement agreement requests Commission approval for new rates to be effective in mid-January. The agreement reduces the overall rate impact on residential customers to less than 11%.
In addition, as part of the proposal, the company would suspend recovery of the Decommissioning Rider and portions of the Purchase Power Adjustment tariff until those costs are financed through securitization. Securitization lowers financing costs and extends the length of time over which Kentucky Power will recover these costs, which helps keep monthly bills lower than they would be under the current recovery process.
Parties to the settlement include the Kentucky Attorney General, Kentucky Industrial Utility Customers, Walmart, Steel of West Virginia Kentucky; and a group comprised of consumer advocate groups, such as Kentuckians for the Commonwealth, the Mountain Association, Appalachian Law Center and Kentucky Resources Council. All parties participated in settlement negotiations and signed the agreement, with the Attorney General and Steel of West Virginia signing as non-opposing parties.
The settlement is subject to review and approval by the Kentucky Public Service Commission.
