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September 04, 2015 5:06 AM ET

Electric Utilities

Company Overview of Kentucky Power Company

Company Overview

Kentucky Power Company engages in the generation, purchase, sale, transmission, and distribution of electric power in Eastern Kentucky, the United States. As of December 16, 2014, the company provided electricity to approximately 172,000 customers in 20 Eastern Kentucky counties. It also sells electricity at wholesale to municipalities. The company was founded in 1919 and is based in Columbus, Ohio. Kentucky Power Company operates as a subsidiary of American Electric Power Co., Inc.

1 Riverside Plaza

Columbus, OH 43215

United States

Founded in 1919

Phone:

614-716-1000

Key Executives for Kentucky Power Company

President and Chief Operating Officer
Age: 63
Director and President of American Electric Power Company Inc
Age: 68
Chief Accounting Officer, Senior Vice President, Controller, Chief Accounting Officer of American Electric Power Company, Senior Vice President of American Electric Power Company Inc. and Controller of American Electric Power Company Inc
Executive Vice President, Director, Chief Financial Officer of American Electric Power Company Inc and Executive Vice President of American Electric Power Company Inc
Age: 62
Director and Executive Vice President of American Electric Power Company Inc
Age: 61
Compensation as of Fiscal Year 2015.

Kentucky Power Company Key Developments

Kentucky Power Appeals PSC Order to Discontinue Collection of $54 Million in Fuel Costs

Kentucky Power Co. is appealing a decision by the Kentucky Public Service Commission that ordered the utility to cease collecting $54 million in fuel cost fees from its customers. The Jan. 22 order directed the utility to pay back $13 million in fuel costs already collected during the first four months of 2014. The PSC said it would deal with charges collected in the latter months of 2014 in future fuel cost review proceedings. The American Electric Power Co. Inc. subsidiary was expected to refund the $13 million on customer bills in February through May by applying credits to customers' bills. The utility was also directed to forgo the collection of the remaining $41 million in fuel costs. Kentucky Power filed the appeal in Franklin County, Ky., Circuit Court on Feb. 18 seeking to reverse the commission's order and correct what Kentucky Power President and COO Greg Pauley, in a Feb. 23 news release, called "disappointing language." The PSC, in its January order, criticized Kentucky Power for providing misleading or incomplete information regarding an earlier case involving the utility's purchase of a 50% interest in the 1,560-MW coal-fired Mitchell power plant in Marshall County, W.Va., from a corporate affiliate to replace the 800-MW output of unit 2 at the Big Sandy generating unit in Lawrence County, Ky., which is to be retired. In evidence submitted in the Mitchell case, Kentucky Power said the acquisition of the plant would reduce the company's annual fuel costs by $16.75 million, with those saving passed on to ratepayers. However, the company did not disclose that operating the surplus generating capacity - during the period in which Kentucky Power operates the Mitchell plant and Big Sandy 2, which is due to be shut down by the end of May - would impose an additional $38.25 million in annual fuel costs on Kentucky Power's customers due to the method the company uses to calculate those costs, the PSC contended. Kentucky Power originally sought the fuel cost charges while it was running the Mitchell power plant and Big Sandy unit 2 at the same time, according to the news release. Retiring Big Sandy unit 2 at the end of May will eliminate the need to collect the fees. Kentucky Power wrapped up the purchase of the Mitchell plant earlier in February 2015, which was acquired to meet customer needs and pending U.S. EPA Clean Power Plan regulations. Kentucky Power, in its news release, explained that the PSC allows utilities in the state to pass fuel costs on to its customers on a dollar-for-dollar basis, reflecting actual fuel costs. The utility does not earn a profit from the fuel costs.

Kentucky Power Gets Kentucky Public Service Commission Approval to Convert Smaller Big Sandy Plant from Coal to Natural Gas

The Kentucky Public Service Commission approved a plan that will enable Kentucky Power Co. to continue generating electricity at its Big Sandy plant by converting the smaller of its two coal-fired units to run on natural gas. The decision does not affect plans to close the larger unit by June 1, 2015. The Big Sandy plant is near Louisa in Lawrence County. In an order issued, the PSC said conversion of the unit is the most cost-effective way for Kentucky Power to meet its generation needs and "preserves a viable generating plant operating within the Commonwealth, thus retaining some of the current employees and supporting the local tax base. Kentucky Power is converting Big Sandy Unit 1 to meet stricter federal air-quality requirements to reduce emissions of mercury and other toxics. Without the conversion, the 278-megawatt unit would have to be shut down in April 2015. The PSC said converting Big Sandy Unit 1 also permits Kentucky Power to diversify its fuel supply and thus be less vulnerable to future "regulatory or economic changes targeted at a single fuel source". After Kentucky Power determined that it made no economic sense to retrofit the 50-year-old Big Sandy Unit 1 to meet stricter air-quality standards and continue burning coal, the company analyzed a number of options for replacing its generating capacity. These included buying power on the open market and eventually building a new natural-gas fired plant. At a cost of $50 million, the coal-to-gas conversion of Big Sandy Unit 1 proved to be the most reasonable and lowest-cost option and will have the lowest impact on rates, the PSC said. In addition to converting the unit, which will reduce its capacity from 278 megawatts to 268 megawatts, the plan calls for construction of a natural gas pipeline to serve the plant. Columbia Gas Transmission LLC will build and operate the pipeline and will recover the $49 million cost from Kentucky Power over a 15-year period. The coal-to-gas conversion of Big Sandy Unit 1 is the final piece of Kentucky Power's restructuring of its electricity-generation portfolio. Last year, the PSC authorized Kentucky Power to buy a 50% interest in Ohio Power Co.'s Mitchell power plant, which is south of Moundsville, W.Va. Kentucky Power and Ohio Power are both subsidiaries of American Electric Power Co. The 780 megawatts of coal-fired capacity at Mitchell will replace the 800-megawatt Unit 2 at Big Sandy. Under a 2007 federal court consent decree, Kentucky Power decided to close the unit in mid-2015 rather than upgrade it to meet stricter air-emission standards. The purchase of the Mitchell capacity was far less costly than upgrading Big Sandy Unit 2 and would have a much smaller impact on rates, the PSC said in approving the transaction.

Kentucky Power Co. Plans to Close 800-Megawatt Unit in 2015

Kentucky Power Co. plans to close the 800-megawatt unit in 2015. Dozens of prime jobs will be lost in a county of 16,000 people with little other industry and a jobless rate around 10%.

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