The Kentucky Public Service Commission announced May 4 that it has approved the sale of Kentucky Power to Liberty Utility Co. with modifications to the original proposal.
According to a statement from the PSC, in a Jan. 4 application, Liberty proposed to acquire Kentucky Power and AEP Kentucky Transmission at a price of $2.846 billion, which included the assumption of $1.221 billion in debt. The PSC statement said that, of the purchase price amount, Kentucky Power parent company American Electric Power would net $1.4 billion in cash after taxes and transmission fees, which AEP indicated it would reinvest in renewable energy in other AEP subsidiaries, none of which are in Kentucky.
Included in the purchase price, the statement said, was a $585 million acquisition premium paid by Liberty to AEP, which represented the amount of the purchase price above Kentucky Power’s net book value.
Included in the modifications and requirements ordered by the PSC are:
• A requirement that Kentucky Power ratepayers receive a $30 million payment to remedy, “the continued subsidization of transmission investments of other AEP affiliates.”
• The creation of a $43.5 million fund to offset deferred distribution restoration expenses. While the PSC notes in the statement that that the expenses are the result of storm damage, “they are a direct result of Kentucky Power’s underinvestment in its system, including the failure to address appropriate loading levels required for the utility’s distribution system.
• The institution, with modifications, of a $40 million fuel adjustment clause credit, to be returned via a sur-credit between July 1, 2022, and Dec. 31, 2023, with 75 percent to be returned to the residential class of customers and 25 percent to be returned to non-residential class.
• A three year deferral of the Big Sandy Decommissioning Rider, but requiring that Kentucky Power share in the carrying cost associated with deferring instead of recovering the amounts.
For more details on the PSC order and reaction, check out the May 6 edition of the News-Express.