State Lowers Residential Rates at KY Power

May 25, 2011

FRANKFORT – The Kentucky Public Service Commission has approved an expansion of residential energy conservation and efficiency programs for Kentucky Power Co. In an order issued Wednesday, the PSC authorized Kentucky Power to expand programs that promote installation of high-efficiency heating and cooling systems. The PSC also approved revised surcharges that will result in lower bills for residential customers, according to a PSC news release. Kentucky Power has about 176,000 customers in 20 Eastern Kentucky counties.

Kentucky Power’s energy conservation and efficiency initiatives are included in the company’s demand-side management (DSM) program. In accordance with Kentucky statutes, the DSM program is funded through a surcharge on electric and natural gas bills.

A utility is required to demonstrate that its DSM program is cost-effective. As a whole, the components of Kentucky Power’s DSM program meet that test, the PSC said.

Kentucky Power estimates that its DSM programs reduced usage by 2.37 million kilowatt-hours last year. Peak demand in winter was reduced by 2,726 kilowatts.

The expanded programs are intended to replace inefficient resistance heating units with high efficiency heat pumps, which use much less energy. They include incentives of up to $400 for mobile home owners who make the switch.

A similar program, with a $400 incentive, is available for owners of site-built homes who replace resistance heaters or old, inefficient heat pumps with new, more efficient units.

Purchasers of new mobile homes can receive incentives of as much as $500 for upgrading to better insulation or high-efficiency heat pumps.

Kentucky Power hopes to expand the three programs to serve a total of 710 residential customers per year, about 200 more than currently make use of the incentives.

Kentucky Power’s DSM program also offers incentives to commercial customers to upgrade their heating and cooling systems.

While expanding its DSM program, Kentucky Power also is lowering the surcharges assessed on residential electric bills to better reflect program costs and allocation of those costs among different customer classes.

The surcharge on residential electric bills will drop from .16 cents per kilowatt-hour to .08 cents per kilowatt-hour. The program’s annual cost is about $2.5 million.

The order and related documents can be found on the PSC website, The case number is 2011-00055.