The Crisis of Rising Energy Bills: Why Kentucky Needs an Affordability Docket

The Kentucky Sierra Club and other organizations are asking the Kentucky Public Service Commission to open an affordability docket, as states like Indiana have recently done. An affordability docket would allow the PSC to conduct a focused and timely investigation into the drivers of rising energy costs across our Commonwealth and begin to identify solutions. Affordability is an important issue to all Kentuckians, including our members, and while there may not be an easy fix, we know that the Commission shares these concerns.

As residential energy bills increase, low- and moderate-income families feel that strain in a state with the fourth lowest per capita income in the country. Kentucky families need solutions that will lower energy burdens and monthly costs.

Right now, families across the U.S. pay more for electricity and gas than they have in many years. According to the U.S. Energy Information Administration, between January 2025 and January 2026, the average residential electricity price nationally rose nearly 9.5%. According to the Center for American Progress, during the same period utility companies across the country raised rates or asked for rate increases totaling $95 billion.

Energy burden, defined as the percentage of household income spent on energy costs, can help contextualize the strain of rising energy costs on families. A recent Sierra Club study on energy burden nationally found that the average monthly electric bill reached $146 by the end of 2024. U.S. households then spent $116 more in 2025 than in 2024 on electricity bills.

This is unsustainable, and no corner of our Commonwealth has been spared from steeply rising energy bills. The Commission is well positioned to convene a public process that includes extensive public outreach in all areas of the state, solicits feedback from all stakeholders, and brings together representatives from Kentucky's utilities, energy sectors, and all ratepayer classes. Below, we outline several areas of concern that we believe could be explored during an administrative case involving Kentucky's electric utilities and stakeholders.

First, we are deeply concerned about Kentucky's continued reliance on some of the highest cost coal-burning plants in the country. Within the last year, utilities in Kentucky have requested authorization to invest hundreds of millions of ratepayer dollars on projects that will extend the life of aging coal-fired plants once slated for retirement, some of which are out-of-state plants that don't employ Kentucky workers or pay most Kentucky taxes. For example, an analysis reported on by Louisville Public Media found that KU and LG&E customers have paid nearly $168 million in losses generated by the Ohio Valley Electric Corporation (OVEC) plants in the past 7 years.

A recent study released by the Kentucky Resources Council and several other organizations found that the lowest cost energy available to Kentuckians will require a transition away from coal and gas; better utilize energy efficiency measures, renewable generation, and battery storage; and save Kentucky ratepayers billions of dollars. That finding tracks a Politico report concluding that states with more renewable energy generation have lower electric bills.

Second, we are concerned that the rapid deployment of data centers could increase costs for Kentucky ratepayers. And while Kentucky doesn't have a single large-scale data center anywhere in the state, just a small number of concrete proposals have generated significant local controversy. We think it would be beneficial for the Commission to bring the relevant stakeholders together, compile the appropriate information, and explain to the public how data centers are likely to affect household energy bills before those data centers come to our communities. We recognize that the Commission has already taken some steps to address these concerns by reviewing utility-specific large-load tariffs, but we think a more comprehensive, statewide forum would go a long way toward addressing community concerns and facilitating an open dialogue about what's in Kentuckians' best interest. To be clear, our organizations are not anti-data center. But we want to ensure that community concerns are heard and that existing ratepayers aren't forced to pay for the electricity needed to power energy-intensive warehouses owned by out-of-state, multi-billion dollar corporations.

We believe that data centers should be required to pay for 100% of the costs that they cause on a utility's system, which must include the cost of driving up market energy prices in the communities in which they locate, and not just the added cost of capital equipment. This is not a partisan issue. The view that data center developers should have to cover their own costs is shared by the Trump Administration, which in early March announced the Ratepayer Protection Pledge. Under this pledge, which was signed on to by multiple large tech companies, those companies committed to covering the costs of new electricity generation needed to power those companies' demand. The Commission should hold those companies accountable to the pledge and work with utilities to carry it out in the interests of Kentucky ratepayers.

As the Commission recognized in approving EKPC's large load tariff last year, early and transparent community dialogue is essential to addressing local concerns before projects are so far along that the die is already cast. As the only state-wide authority on data center electricity rates, the Commission is uniquely placed to lead a discussion between utilities, industry stakeholders, and the public setting out (1) the approval processes required to connect data centers to the grid and supply them with power, and (2) the timing and scope of information about potential data centers that can and should be made available to the public. We've already seen examples here in Kentucky where data center developers tied local authorities' hands by imposing stringent non-disclosure agreements that shielded very basic information from public scrutiny, including the location of the potential data center, how much electricity the project would consume, how that energy would be supplied, and who would pay for it. Without a clear, shared set of expectations around public disclosures, the inevitable result will be local frustration, public mistrust, and, very likely, extended litigation, all of which could be avoided.

Third, we want to ensure that Kentucky doesn't become a place where real estate developers can drive utility investments in new electric generating capacity for hypothetical data center customers that may not ever exist. It's no secret that data centers are experiencing a boom nationwide. And it has been widely reported that there are far more data center projects in utilities' economic development pipelines than will conceivably be built. A Sierra Club 2025 report found that just two dozen utilities had been approached with over 700 GW of potential data center development, which is enough energy to consume every unit of electricity produced in North America in 2024, and revealed that the precise scale of data center speculation is hard to pin down.

We believe the Commission is ideally situated to provide legislators, the public, and other stakeholders with actionable information on how to address the crisis of rising energy prices in our state. Our proposed affordability docket should provide a helpful forum for the Commission, utilities, and members of the public to explore these critically important issues before ratepayers are saddled with decades of unnecessary energy costs from new and retrofitted fossil generation.

Kentucky families are facing rising utility bills while utilities continue to make significant capital investments and earn significant returns for shareholders. An affordability investigation should examine whether the risks and costs of those investments are being allocated fairly, and whether existing regulatory policies appropriately balance shareholder returns, or whether Kentucky families are being asked to bear an unfair share of the burden.

Kentucky Power has sought rate increases in four of the last five years. In 2020, the company sought a 13.6% increase and was granted 10.2%. In 2023, it sought another 13.6% increase, eventually securing a 10.7% increase after appeal. The company's latest proposal, which was ultimately reduced to a roughly 6% increase, would still leave average residential customers paying $194 per month, among the highest rates in the state and well above the national average of $146.

Kentucky Attorney General Russell Coleman took the extremely rare step of asking the PSC to deny Kentucky Power's rate increase outright, arguing there was no evidence the company would suffer harm if the increase was denied, especially since its parent company, American Electric Power, had just posted record earnings.

Between 2017 and 2022, Kentucky Power customers subsidized an estimated $66 million of transmission investments in other states, far exceeding what was invested in Kentucky. As Attorney General Coleman put it: "For generations, outsiders have taken advantage of Eastern Kentucky in attempts to sap its resources and drain families' money."

Kentucky Power customers are being asked to pay for a $95.5 million share of a cooling tower replacement at the Mitchell Power Plant in West Virginia, a plant that employs no Kentucky workers, burns little Kentucky coal, and pays no Kentucky property taxes. This comes on top of the $2.33 per month customers are already paying to maintain Kentucky Power's 50% ownership stake in the Mitchell plant beyond 2028. Meanwhile, West Virginia customers will pay just $1.22 per month for the same project, due to the much larger customer base across which the costs are spread.

Finally, as part of this docket we sincerely hope that the Commission will ensure it hears from everyday Kentuckians about their experiences with rising energy costs. We respectfully encourage the Commission to review the deeply heartfelt testimonies of Kentucky Power customers before they were told they would have to endure another rate hike in February, and the testimony in Middlesboro around LG&E/KU's most recent CPCN early last fall, as those cases provide an important window into whether or not the rates being allowed in our state are just, fair and reasonable from the viewpoint of Kentucky's ratepayers.

At public hearings in Pikeville, Hazard, and Ashland, Kentucky Power customers shared heartbreaking stories of struggle. As the Attorney General's office noted in its brief, "Those accounts included examples of individuals who desperately want to live in Eastern Kentucky, but who are considering leaving based simply on the cost of electric service in the area."

Suzanne Griffith, a retired teacher in Ashland, testified that she has "talked to maw maws who are sleeping in their housecoats or bundling up the kids at night" and "people that literally cannot pay their bills. So they're having to move in with other relatives."

Small business owners also spoke out, warning that rate hikes would make it harder to keep their doors open. As Diamond Lewis told the PSC: "You're wanting to raise the rates, but here we are trying to bring businesses in to create an economy for people to stay here. If the rates are higher, if we don't give those businesses an opportunity to come in, some help to create something, it's just a snowball effect."

At a public hearing in Lexington, Germantown city commissioner Max Moran expressed concern for constituents on fixed incomes, asking whether they "will still be able to afford their electricity bills should this increase pass." In Middlesboro, similar testimony was heard during LG&E/KU's CPCN case.

In its 225-page decision on the Kentucky Power case, the PSC acknowledged the frustration of electricity customers. Chair Angie Hatton stated: "We heard emotional pleas at our public comment hearings from ratepayers. They are angry and scared of the additional financial hardship caused by any potential increase."

We all agree that energy burdens in our state are rising and that Kentuckians need relief now. We respectfully ask the Commission, as the only executive branch agency tasked with providing our legislature information on how to keep utility costs fair, just and reasonable, to act. This is a challenging topic, and we urge you to keep the stories and interests of Kentucky families across our state front of mind as you engage in the difficult and important work of keeping utility bills as low as possible. Right now, families in our state are struggling to pay unaffordable energy bills, with no relief in sight. We believe that the Commission is in the best position to lead our state into a healthier, more affordable, and more sustainable energy future. We urge the Commission to address the electricity affordability problem head on, without delay, and to provide other state leaders and the public with the information they need to put forward comprehensive solutions.