9/26/2005
Kentucky Power seeks first rate increase in more than 20 years

FRANKFORT, KY -- Kentucky Power Company, a subsidiary of American Electric Power, today filed a base rate case with the Kentucky Public Service Commission (KPSC) to recover increasing costs associated with providing safe and reliable electric service to customers. The filing calls for an increase in revenue of $64.8 million over existing rates and asks for a general rate increase for Kentucky Power customers. It is the first base rate increase the company has requested in more than 20 years.
 
If approved by the KPSC, the bill for a typical residential customer using 1,000 kilowatt hours of electricity per month will rise from the current price of $58.33 to $73.73 (or 5.8 cents per kilowatt hour to 7.37 cents per kilowatt hour) - an increase of approximately 26 percent. Presuming the company’s case follows prescribed regulatory procedures, the rate increase would not take effect any earlier than April of 2006.
 
The increasing costs of doing business, including the costs of labor, benefits, material, supplies and equipment, is the primary reason the company is seeking rate relief from regulators, according to Tim Mosher, president and chief operating officer of Kentucky Power. Mosher said 1988 was the last time Kentucky Power customers saw a base rate increase.
 
In 1990, the KPSC ordered a base rate reduction for Kentucky Power customers. From time to time since then, the company has sought surcharges to recover costs associated with the changing price of fuel for its power plant and to recover environmental investments associated with compliance of the Clean Air Act.
 
"Kentucky Power has done all it can to control costs and to find methods of improving efficiencies," Mosher said. "Of course, we continually review our operations and implement cost savings measures whenever possible, but the reality is that we find it necessary to ask the Commission for a rate increase to keep up with the increasing costs of doing business," he said.
 
Mosher said that even with the proposed increase, Kentucky Power’s rates will remain fairly priced. "Electricity is still a good value, particularly when you compare it against other energy costs like natural gas or gasoline. Our rates will remain competitive - if not better - than other states in our region."

Mosher pointed out that the rate increase is also necessary to provide reliable service to customers. "We are charged with providing safe and reliable service to our customers and that requires a substantial investment in the infrastructure and facilities used to provide that service. With increased revenue comes increased investment dollars - dollars that we put back into our system to enhance reliability."
 
Kentucky Power provides electricity to approximately 175,000 customers in all or parts of 20 Eastern Kentucky counties. It is a unit of American Electric Power, the nation’s largest electricity generator. AEP owns more than 36,000 megawatts of generating capacity and is one of the nation’s largest electric utilities, with more than 5 million customers in 11 states. AEP is based in Columbus, Ohio.

Ronn Robinson
Corporate Communications
502.696.7003

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