July 3, 2013
On Friday, June 28, Kentucky Power Company, a wholly-owned subsidiary of American Electric Power (AEP), filed a base rate case with the Kentucky Public Service Commission (PSC) that seeks a 31 percent rate increase to recover costs associated with the Mitchell Plant asset transfer.
Be assured, my Office of Rate Intervention and I will oppose this filing before the PSC for several reasons. First of all, it’s premature as the PSC has not yet approved the transfer of the Mitchell Power facility. Secondly, a 31 percent residential rate increase is far too much for hard-working Eastern Kentucky residents to absorb during these tough economic times. We are also concerned that all other potential options have not yet been explored by the PSC.
I also want to set the record straight regarding a Memorandum of Understanding (MoU) that Kentucky Power says would result in a much lower rate increase of 8 percent. We have not signed this MoU.
It’s important to note that a MoU cannot be approved by the PSC. Kentucky Power and the intervenors agreeing to the MoU, which do not include my Office, have not yet filed a Stipulation and Partial Settlement Agreement with the PSC. Therefore, there is nothing for the PSC to “approve” or reject other than the original application filed by Kentucky Power.
While it is correct that the MoU would limit the rate increase to 8 percent, it is only temporary. As per the MoU, Kentucky Power agrees to delay its 31 percent rate increase, or an even higher amount, for a period of 18 months.
Even if the Stipulation is filed and approved, the terms allow Kentucky Power to file for a rate increase on Dec. 29, 2014, with an effective date of June 1, 2015, just prior to when the Big Sandy Unit 1 must be retired or retrofit per federal court order.
Again, a rate increase of this magnitude is far too heavy of a burden for Kentucky rate payers during these tough economic times.
Protecting Kentuckians from excessive or unnecessary utility rate increases continues to be a top priority of mine. Since 2008, we’ve intervened in rate cases and other utility matters resulting in more than $1 billion in savings for rate payers. I appreciate the hard work of my Office of Rate Intervention and I am proud of all that we have accomplished for Kentucky families.
Attorney General Jack Conway