We understand the frustration surrounding Kentucky Power’s electric rates—and we share that frustration.

Rising energy costs affect households, businesses and communities across eastern Kentucky. While many factors influence electricity rates, there is a path forward toward long-term economic development that strengthens our system and spreads costs more fairly across all customers.

Why Electric Rates Have Increased

Electric rates are shaped by several factors, including fuel prices, taxes, inflation and regulatory requirements. However, one of the most significant drivers of rising rates in eastern Kentucky has been the steady loss of customers.

Over the past 15 years, population decline and the closure of energy-intensive industries have reduced total electricity sales in the region. When fewer customers are sharing the fixed costs of operating and maintaining the electric system—the poles, wires, substations and power plants—the cost per customer inevitably increases.

Economic Development Is the Long-Term Solution

Economic development is the most effective way to address the challenge. Attracting new jobs and businesses increases overall electricity usage, often referred to as “electrical load,” which helps spread system costs over more sales. Over time, this can reduce pressure on rates for all customers.

A successful economic development strategy does not happen overnight. It requires years of planning, partnership and competition with other regions. However, eastern Kentucky has a real opportunity in front of it. Thoughtful growth—particularly from large, consistent electricity users—can strengthen the electric system, support good jobs, and improve long-term affordability.

Data centers are part of the solution.

Why Data Centers Matter

Data centers use large, steady amounts of electricity, making them reliable long-term customers. When structured correctly, these projects can benefit existing customers rather than increase costs.

Growth from data centers has already demonstrated positive results elsewhere. For example, our sister company, Indiana Michigan Power, has requested to lower and freeze base rates for three years. This is possible because data center growth has increased electricity sales, allowing system costs to be spread more broadly.

In addition to their impact on rates, data center projects bring meaningful benefits to local communities, including:

• Years of construction jobs
• High-wage permanent positions
• Increased local tax revenue

Kentucky Power’s service territory is particularly attractive for these investments due to its proximity to extra-high-voltage transmission infrastructure and the strong reputation of the region’s workforce.

Protecting Customers Through the Large Load Tariff

It is true that serving large new customers may require additional infrastructure, such as transmission upgrades or new generation. Protecting existing customers from bearing these infrastructure costs is a priority.

That is why Kentucky Power established a Large Load Tariff—one of the first of its kind in the Commonwealth. This tariff provides a clear, standardized framework that large customers must follow before locating in our service territory.

Under the Large Load Tariff:

• Large Load customers pay three bill components:
  • A customer charge, which is a fixed monthly fee for being connected to the system;
  • An energy charge based on how much electricity they use; and
  • A demand charge based on the highest amount of power they use at one time during the month.
• Individual Large Load customers must pay for at least 90% of the electricity capacity they request, even if they use less. This ensures stable revenues that help offset or reduce future rate pressure for other customers.
• Large Load customers must commit to an initial contract term of 20 years, allowing for thoughtful long-term system planning.
• If a Large Load customer unexpectedly reduces or stops service, exit fees and financial safeguards are in place, so other customers are not left covering the costs.

These protections are designed to ensure that growth benefits—rather than burdens—existing residential and small business customers.

Ongoing Support for Economic Development

Kentucky Power actively partners with businesses, communities and economic development organizations across our 20-county service territory.

We support local economic development through the Kentucky Power Economic Growth Grant Program (K-PEGG), which is funded by existing non-residential customers contributing $1 per month, matched by Kentucky Power. Together, this program has provided nearly $7 million in direct support for economic development efforts.

As a founding partner of One East Kentucky, we have contributed expertise and resources to help prepare sites, attract industry, and strengthen workforce development. We have also supported organizations such as Shaping Our Appalachian Region (SOAR), the Hazard-Perry County Economic Development Alliance, the Kentucky Association for Economic Development, eKAMI, the Northeast Kentucky Economic Development Authority, Galen College of Nursing and the TEK Center.

A Call to Action

Addressing electricity rates and building a stronger future for eastern Kentucky requires collaboration. We encourage community leaders, local officials, businesses and residents to participate with Kentucky Power and our economic development partners by supporting development initiatives, participating in local efforts and helping position our region for long-term growth.

Together, we can make something positive happen for eastern Kentucky— by improving our economy, supporting good jobs and reducing pressure on electric rates over time.