Kentucky Power rate increase proposal also would reduce solar energy jobs for Kentuckians

The bright potential of the rooftop solar industry for eastern Kentucky could be quickly extinguished if Kentucky Power’s proposed net metering rates are approved by the Public Service Commission.   

As part of its proposed 25 percent residential rate increase, the company wants to reduce the credit value of energy supplied by rooftop solar customers to the utility by two-thirds and move future net metering customers into a complex time-of-use rate. 

This would undermine the growing rooftop solar industry in Kentucky and the jobs it produces, according to Andy McDonald with the Kentucky Solar Energy Society. The result would be to smother the growth of rooftop solar in eastern Kentucky, an industry which is seeing rapid job growth across the country. 

"The proposed system is complicated and very unfair to solar customers," McDonald said. “It does not account for the full value that solar provides to the utility. Kentucky Power thinks it’s fair to charge their customers 15 cents per kilowatt-hour during peak times in the summer, yet only credit solar customers 3.7 cents for the solar energy they supply to the utility.” 

Net metering customers with solar panels on their homes put any excess energy generated back into the electric grid, which Kentucky Power sells to their neighbors or other customers. The solar panel homeowner gets a credit on their bill for those contributed kilowatt-hours, which results in savings on their electric bill and helps pay for the solar panels.

Customers currently receive a one-for-one kilowatt-hour credit. This allows solar generation created during the day to offset energy used at night, and allows the cost of the solar panels to be recovered in about 8 to 10 years, 

Net metering came under attack by state legislators in 2019. A new net metering law gives authority to the Public Service Commission to change how net metering customers are compensated for the power they supply to the grid. The current Kentucky Power rate case is the first case in which it will do so, likely setting a precedent for future cases.

If the company’s proposal is approved by the PSC, these changes would greatly increase the payback period for rooftop solar investments and discourage many people from switching to solar power, denying them the chance to reduce their bills and stabilize their energy costs. 

“Distributed solar needs to remain a viable option for struggling businesses and nonprofits because it will save them money, and help usher in a new sector of energy jobs in eastern Kentucky. Under Kentucky Power’s new proposal, they would remove the one-for-one credit, making it nearly impossible to pay off an investment in solar in a timely manner,” wrote Josh Bills with the Mountain Association. 

Bills has worked with the Mountain Association to help hundreds of businesses, nonprofits, public agencies and homeowners save thousands of dollars in energy cost.

“The simple truth is that solar and other renewable energy projects are good for our state,” he continued. “We see for-profits and nonprofits reduce operating expenses and level out seasonal electric bills through solar every day. We see monthly costs for investments in solar exceeded by monthly bill savings. Planning, building and maintaining these systems requires highly-skilled, good-paying jobs – jobs that eastern Kentuckians desperately need.”

Comments on the proposal may be sent to the Public Service Commission via email with “Case number 2020-00174” as the subject line, to: [email protected]. Provide your full name and place of residence in the body of the email. 

Comments also can be mailed to the Public Service Commission, PO Box 615, Frankfort, Kentucky 40602-0615.

More information and helpful talking points can be found at: kftc.org/kentuckypower2020.

Case documents may be found at: psc.ky.gov/PSC_WebNet/ViewCaseFilings.aspx?case=2020-00174  

Kentucky Power is a subsidiary of American Electric Power, one of the largest utilities in the nation. It owns or operates about 60 generating stations and 40,000 miles of transmission lines, with capacity to supply 26 million customers in 11 states with power.

Kentucky Power serves about 165,000 customers in 20 eastern Kentucky counties.

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