The Kentucky Public Service Commission (PSC) has issued its final order in a major rate case involving East Kentucky Power Cooperative (EKPC), approving a revised revenue increase while rejecting key components of a proposed earnings mechanism.
EKPC had initially requested a revenue increase of $79.75 million, representing a 7.49% rise. Alongside this, all 16 rural electric cooperatives that are owner-members of EKPC submitted applications to pass through the increased costs to their customers.
However, following negotiations, EKPC, the Kentucky Attorney General’s Office, and industrial stakeholder Nucor reached a Joint Settlement Agreement (JSA) on November 25, 2025. The agreement proposed a reduced revenue increase of $63.7 million (5.99%), along with structural changes to EKPC’s financial oversight mechanisms.
One of the key proposals in the JSA was the introduction of a Symmetrical Earnings Mechanism (SEM). Under this system, EKPC would automatically refund excess earnings to members if it exceeded a 1.6 Times Interest Earned Ratio (TIER), and collect additional funds if earnings dropped below 1.4 TIER. The mechanism was designed to ensure balance by adjusting customer bills through credits or charges.
In its final order, the PSC approved a slightly modified revenue increase of $63.67 million, equivalent to 5.98%, but rejected the SEM proposal. The Commission cited concerns that EKPC’s recent financial trends indicate a higher likelihood of collecting additional revenue from customers rather than issuing refunds. It also warned that the SEM could enable automatic bill increases without adequate customer notification or prior regulatory review.
Additionally, the PSC ordered the elimination of the existing Earnings Mechanism (EM) and approved a modified version of the Generation Maintenance Tracker instead. Other adjustments to the settlement agreement were described as minor.
The Commission confirmed that separate decisions regarding the 16 cooperative utilities’ pass-through rate increases will be released in the coming days. All newly approved rates are scheduled to take effect on May 1, 2026.
EKPC supplies electricity generation and energy to its 16 member cooperatives, which collectively serve more than 570,000 homes, farms, and businesses across 89 counties in Kentucky.