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Ky. attorney general goes after Kentucky Power rate increase request

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Ky. attorney general goes after Kentucky Power rate increase request

Kentucky Attorney General Andy Beshear wants state regulators to reject entirely Kentucky Power Co.'s request to increase rates by more than $60 million.

Joined by local legislators, officials, school administrators and other advocates at an Oct. 4 press conference, Beshear called the request an "unnecessary toll on the wallets of eastern Kentucky families" and "another punch in the gut" to those living in an area dealing with economic hardships.

The American Electric Power Co. Inc. subsidiary in June asked for a $65.4 million base rate increase but later cut the the request to $60.4 million. Along with the base rate increase, Kentucky Power also proposed surcharges that bring the total increase to roughly $64.5 million.

Beshear said any increase is too much for an area with families that already have to choose between paying power bills and buying food and asked that the state Public Service Commission fully reject the request.

"It shouldn't be less, it should be zero," he said.

Beshear said the company should forgo the requested increase by implementing stronger controls on spending and by decreasing the amount returned to its shareholders.

"We're not asking Kentucky Power for great sacrifices," he said.

Kentucky Power President Matt Satterwhite, in a statement issued in response to the press conference, said the utility "obviously disagrees" with Beshear's comments.

"We believe his urging to dismiss Kentucky Power's rate adjustment is groundless," Satterwhite said. "The [attorney general's] position wrongly places the blame on a poor economy on an eastern Kentucky business. Kentucky Power is focused on the long-term strength of eastern Kentucky."

Beshear's remarks came a day after the attorney general's office filed testimony in the case. That filing included testimony from four experts, including economist David Dismukes, who said a rate increase would further hurt an economically struggling area.

"While there is some evidence that the Eastern Kentucky economy is starting to turn around, this potential economic turn-around does not support laddering the region with additional electric utility rate increases; affordability is still a real and important issue for many households in this region," Dismukes said.

Beshear spokesman Terry Sebastian said the attorney general's remarks are based on Dismukes' analysis that the area cannot sustain the proposed rate increase.

The attorney general's filing included testimony supporting a $39.9 million base rate increase and a return on equity of 8.6%, far less than Kentucky Power's request for a 10.31% ROE, according to Regulatory Research Associates, an offering of S&P Global Market Intelligence. The testimony also does away with proposed economic development and environmental surcharges, for an overall increase of around $39.9 million.

Sebastian said an examination of Kentucky Power's request and offering what an increase ought to look like is part of the regulatory process and duty of the attorney general's office. When hearings take place in early November, Beshear will ask the PSC to grant nothing, Sebastian said.

Satterwhite said the same economic challenges facing the community affect the company.

"That is why we are reducing spending while still providing high quality service to our customers. We're continuing to trim trees, restore service and doing the things needed every day to make sure the lights come on when our customers flip the switch," he said. "It also is why we are committed to economic development. Kentucky Power is leading the charge to diversify the economy and bring jobs to the region." (Kentucky PSC Case No. 2017-00179)