Utility regulator launches investigation into ‘troubling’ Kentucky Power planning practices

Kentucky’s utility regulator has launched an investigation into concerns it has about “troubling” managerial and planning practices at investor-owned electric utility Kentucky Power. 

The Kentucky Public Service Commission wrote in a Thursday morning order that it was opening an investigation into the Eastern Kentucky utility following years of concerns the regulator and the Kentucky attorney general have had over the utility’s energy planning decisions.

The regulator specifically referenced Kentucky Power’s decision to try to keep operating its coal-fired Mitchell Power Plant in West Virginia. 

The commission in its order wrote in reference to the Mitchell Power Plant about the “ongoing issue with Kentucky Power’s failure to provide thorough and rigorous analysis when making large financial decisions” that resulted in the commission “approving ‘the least bad option’ instead of being confident in the utility’s application and proposal.” 

The regulator had signaled it would open such an investigation when it approved an increase in Kentucky Power’s rates earlier this year, reducing the amount of the increase after hearing “emotional pleas” from ratepayers opposed to the rate hike. The regulator wrote in its Thursday order that an audit would be made publicly available at the conclusion of the investigation. 

Kentucky Power spokesperson Sarah Lynch in an emailed statement said the utility respects the commission’s decision and welcomed the opportunity to participate.

“As a regulated utility, independent oversight is an important part of serving our customers and maintaining public trust. We will fully cooperate with the commission and its selected consultant throughout the audit,” Lynch said. “We serve one of the most challenging electric service territories in Kentucky, and our employees work every day to safely deliver reliable electric service across Eastern Kentucky. We are always looking for ways to strengthen our operations and improve the experience we provide our customers, and we believe this process provides another opportunity to do that.”

Republican Attorney General Russell Coleman earlier this year had called for the commission to conduct an independent audit of Kentucky Power, covering topics including the utility’s “poor resource planning”, its “historic underinvestment in its distribution system” and whether the utility is  “unreasonably influenced by its corporate parent”. Kentucky Power is one of several subsidiaries of Ohio-based American Electric Power. 

In a written response to Coleman, attorneys for Kentucky Power wrote that Coleman’s suggested audit topics were “patently biased” but that it was not opposed to an impartial audit by the commission that “does not seek to relitigate decades-old decisions approved” by the state regulator.

This story has been updated.