FRANKFORT, Ky. — The Kentucky Public Service Commission (PSC) has opened a proceeding to determine how much money should be returned to Kentucky-American Water Co.’s ratepayers as a result of the utility reducing its costs by refinancing $71.39 million in corporate debt.
In an order issued today, the PSC directed Kentucky-American to file within 15 days its proposed mechanism for returning the savings from the refinancing to its customers.
The case stems from Kentucky-American’s last rate case, which was concluded in June 2019 with a PSC order granting the utility a rate increase. The increase was based on Kentucky-American’s projected costs for the 12 months ending June 30, 2020.
During the rate case, Kentucky-American indicated that it was looking into refinancing more than $97 million in long-term corporate debt over the following two years. It further stated that that a refinancing would be followed by an evaluation of whether a rate change would be appropriate to reflect the savings as a result of lower interest costs.
Kentucky-American ultimately refinanced $71.39 million in long-term debt on Nov. 19, 2019. Because the refinancing took effect during the period used to determine the utility’s current rates, the PSC found that a case should be opened to determine how the savings should be reflected in Kentucky-American’s rates, taking into consideration both the savings to-date and in the future.