State regulators have approved the sale of an Eastern Kentucky utility company to a Canadian-based company, but not without adding some conditions to the nearly $2.85 billion deal.
Among the stipulations the Public Service Commission put on the Liberty Utility’s purchase of Kentucky Power from American Electric Power is a $40 million rate adjustment. That means Kentucky Power customers will receive monthly credits of more than $32 in winter months and $1.40 in other months.
The PSC also required a $43.5 million fund to pay for the damage incurred to Kentucky Power’s infrastructure during the winter storms that hit Eastern Kentucky last year.
“The commission noted the purpose of the fund is to ensure ratepayers are not harmed post-transaction by AEP’s under-investment over the years and the company’s repeated failure to comply with the commission’s directives and suggestions to improve the distribution system,” the PSC statement read.
Kentucky Power serves about 165,000 customers across 20 counties. In addition, the utility company owns a natural gas power plant in Lawrence County and owns a 50% stake in a coal-fired production facility in West Virginia.
After the sale was announced last October, critics – including lawmakers and other state officials – raised concerns about the transaction and whether Liberty could give residents affordable and reliable power.
Lawmakers pointed out customers in the region – one of the poorest in Kentucky – experienced significant increases in their utility bills.
Attorney General Daniel Cameron said his office evaluated the deal and found AEP would be getting a $585 million “premium” from the sale.
The PSC imposed conditions that covered nearly a quarter of that premium.
“Our office went before the PSC to ensure Eastern Kentucky electric utility ratepayers benefitted from Liberty’s acquisition of Kentucky Power from AEP, and we are pleased that our efforts resulted in over $143 million in benefits for Kentucky ratepayers,” Cameron said in a statement. “We know rising utility bills have strained the budgets of many Kentuckians, and we appreciate that the PSC adopted modifications to create savings for Kentucky ratepayers before authorizing the sale of Kentucky Power.”
Other stipulations imposed on the transaction include a $30 million payment to ratepayers. The PSC said that was in response to infrastructure upgrades AEP made in other regions off the backs of Kentucky Power customers. The Commission noted that the failure to take care of that refund could lead to an order for another $45 million refund.
The PSC made its ruling Wednesday with just one person on what’s supposed to be a three-member commission. Two members previously appointed by Democratic Gov. Andy Beshear did not have their appointments confirmed by the Republican-led General Assembly during the session that concluded last month.
Beshear has said there have been rulings made in the past when the agency had just one person on the Commission. His office is looking to fill the vacant seats.
This article was originally posted on PSC approves Kentucky Power sale but adds conditions to the $2.85B deal