Hearing to consider Kentucky Power rate hike begins

FRANKFORT, Ky. (WYMT) - An expert witness for the Kentucky attorney’s office on Wednesday told the Kentucky State Public Service Commission that his calculations justify a nearly $39.9 million rate increase for Kentucky Power customers.

Wednesday’s hearing was the first of a multiday evidentiary hearing. In June, Kentucky Power filed a rate review request with the PSC seeking to recover nearly $70 million from customers.

A settlement reached last month lowered that amount to just under $35 million.

If approved, new rates would go into effect in mid-January.

The settlement proposes rates based on the opportunity to earn a return on equity of 9.75 percent, which Kentucky Power consider a vital component to attract investment. The settlement also provides a mechanism for Kentucky Power to recover 80 percent of its mandatory federal transmission expenses. The company had indicated that it would have to file another case immediately if the federal transmission costs were not accounted for in this case.

Kentucky Power President Matt Satterwhite testified that recovery of transmission costs are mandated by PJM, the regional grid operator that oversees transmission lines in Kentucky and 12 other states.

While on the stand, Satterwhite touted the benefits of the settlement agreement as offering a balance. He also testified that the Kentucky Power’s economic development efforts to bring industry and jobs to the region drives his decisions.

“It’s not just important, it’s vital. My number one goal after the safety of my employees is economic development. We have to put all our efforts into there. We’ve got to tear down county lines and political lines and be one big region,” Satterwhite said. “We need to change the face of eastern Kentucky to bring diversity of industry.”

“I think what this case is doing is allowing a vital corporate partner to provide safe, reliable service as a key component of helping people locate in eastern Kentucky and bring in more companies. … It’s really an overall strategy of do you want to stick were you are or do you want a strategy that grows the entire region.”

As a result of the balance provided by the settlement, Kentucky Power agreed that if the agreement were approved, it would not seek an update to its general base rates until at least 2021.



 
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