PSC Opens Investigation into Kentucky Power Company

By Roberta Cantrell
BSN Editor

The Kentucky Power Company (KPC) falls under scrutiny after an order has been launched by the Kentucky Public Service Commission for an investigation case to proceed with a management audit.

In a document provided to the public by the Commonwealth of Kentucky before the Public Service Commission in the Matter of Electronic Investigation into the Management and Operation of KPC it states that on Aug. 29, 2025, KPC filed an application for an adjustment of its existing rates based on a “historic test and other associated relief.”

On Feb. 28, 2026, the Commission noted several arguments raising troubling practices and behaviors of KPC that called into question the management and operation of the company and concluded that an audit be performed.

KPC currently provides service to 161,850 to 21 counties in Kentucky including Lawrence, Johnson and Martin.

It is also a subsidiary to American Electric Power Company, Inc. (AEP), a multi-state utility holding company that serves eleven states.

However, Kentucky Power Cost Recovery LLC is a separate entity which is formed in Delaware and is registered to do business in Kentucky.

Cost Recovery is a wholly owned subsidiary of KPC with them owning 100 percent of the outstanding membership interests in and to Cost Recovery.

The Commission’s regulation of rates and service, as defined by the Kentucky law, ensures that utilities may “demand, collect and receive” fair, just and reasonable rates for services rendered and requires utilities to furnish adequate, efficient and reasonable service.

The document states, that furthermore, “no utility may begin construction of any plant, equipment property or facility for furnishing any service related by the Commission until that facility obtains a certificate that public convenience and necessity require the service or construction.”

It goes on to explain that the transfer to control any utility furnishing utility service in this state without obtaining approval by the Commission will be null and void.

In KPC’s most recent case the Attorney General’s Office and through the Office of Rate Intervention raised a number of concerns regarding whether the company is managing its system appropriately.

For example, KPC has filed applications for several Certificate of Public Convenience and Necessity (CPCN) that raised serious questions about its judgement. Additionally, the Commission has raised concerns about Kentucky Power’s planning and decision making related to investments in generation and transmission and highlighted how Kentucky Power’s decisions have potentially impacted ratepayers.

In short, the Commission may provide for management or operations audits or both, of any utility under its jurisdiction on a regular or irregular schedule to investigate all or any portion of its procedures or any other internal workings of the utility.

Once final, the management audit will be made public and will make findings as to and suggestions, if necessary, to improve KPC’s management practices. “Upon completion of the audit, the Commission, at that time may open an investigation to address further issues.”