Kentucky Power’s Settlement to Provide $16.9 Million Refund and Annual Savings of $5.1 Million for Ratepayers

Frankfort, Kentucky — The Kentucky Public Service Commission (PSC) has approved a significant settlement agreement with Kentucky Power Company, which will provide substantial refunds and savings for ratepayers. Announced on December 13, 2024, the settlement mandates Kentucky Power to refund $16.9 million to customers, with additional savings estimated at $5.1 million annually in the future.

This settlement, part of an examination of Kentucky Power’s Fuel Adjustment Clause (FAC) practices between November 2020 and October 2022, is designed to ensure fair pricing for electricity amidst fluctuations in fuel costs. The FAC allows utilities to adjust electricity prices to reflect changes in fuel expenses used for power generation.

The PSC’s Final Order reveals that, under this settlement, Kentucky Power will allocate the $16.9 million refund between residential and non-residential customers based on their historical energy usage from November 2020 to July 2024. Residential customers will receive approximately $6.7 million, resulting in an estimated credit of $51.19 for the average household, distributed across initial months of 2025 and 2026.

For non-residential customers, approximately $10.2 million will be credited, including reimbursements for litigation expenses incurred by Marathon, a member of the Kentucky Industrial Utilities Customers (KIUC). The agreement also stipulates a monthly credit on future bills for residential customers, totaling $838,874, and $1,228,228 for non-residential customers.

Furthermore, Kentucky Power’s calculation method for future FAC reviews will shift, allowing for an estimated annual savings of $5.1 million for its approximately 165,000 customers. These savings will come from the adjustment of startup costs in the calculation process.

Why is this settlement significant? It assures that Kentucky Power’s ratepayers will benefit from substantial refunds and reduced costs, addressing the inquiry into the utility’s fuel acquisition practices and aiming to enhance transparency and efficiency in utility pricing.

The video of the public hearing and further records related to this case can be accessed on the PSC website. The case number for reference is 2023-00008.