
Dive Brief:
- Kentucky Power ratepayers are paying for transmission built by other American Electric Power utilities that don’t benefit them, the Kentucky Public Service Commission and Kentucky Attorney General said in a complaint filed Wednesday with federal regulators.
- Kentucky Power customers have paid at least $75 million since 2019 for transmission built in six other states under a cost allocation framework between AEP utilities, according to the complaint filed with the Federal Energy Regulatory Commission.
- “AEP self-planned transmission projects outside of the Kentucky Power service territory cannot be shown to be sufficiently connected to serving Kentucky Power customers to allocate costs for far-flung transmission projects geared to serve the customers of other AEP retail distribution companies,” the PSC and attorney general said in the complaint. They contend AEP underinvests in Kentucky’s transmission system.
Dive Insight:
Kentucky Power, an AEP subsidiary, “strongly disagrees” with the claims in the complaint and has shown in previous FERC proceedings that its customers benefit from transmission investments in Kentucky and the PJM region, Kentucky Power President Cindy Wiseman said in a press release.
“A strong transmission grid provides our customers and communities with increased reliability and access to low-cost generation resources,” Wiseman said.
The costs for transmission projects that are “self-planned” by AEP utilities in the PJM region are shared by the utilities under an agreement established in 1984 and modified last in 2009, according to the complaint.
AEP utilities subject to the agreement are Appalachian Power, Columbus Southern Power, Indiana Michigan Power, Kentucky Power, Kingsport Power, Ohio Power and Wheeling Power. AEP transmission companies that are part of the pact are AEP Appalachian Transmission, AEP Indiana Michigan Transmission, AEP Kentucky Transmission, AEP Ohio Transmission and AEP West Virginia Transmission.
The Kentucky PSC reviews proposed transmission projects in its state to ensure that they cost-effectively meet the transmission needs to serve Kentucky consumers, the commission and attorney general said in the complaint. The agency is unable to review out-of-state projects to make sure they benefit people in Kentucky, they said.
Further, some transmission projects in other states aren’t reviewed by other regulators, the commission and attorney general said, citing a separate complaint brought by the Office of the Ohio Consumers’ Counsel.
“Perversely, any denial of an AEP self-planned project in Kentucky by the Kentucky PSC, would only worsen the status quo for Kentucky consumers since the impetus for AEP to build self-planned projects would continue to shift to other states in the AEP Zone without the same level of regulatory oversight,” the PSC and attorney general said.
The state agency and attorney general urged FERC to require AEP amend the transmission agreement to ensure that the costs for self-planned transmission projects remain exclusively in the utility service territory causing the need for the project, unless AEP shows an individual project deserves a broader cost allocation.