Energy Ventures Analysis (EVA) has released a white paper that explains Kentucky’s low electricity rates. The following are a few highlights from the paper:
- Kentucky has maintained some of the lowest electricity rates in the nation, primarily due to its abundant coal resources and regulation by the Kentucky Public Service Commission. These factors have protected the state from the price volatility that affects deregulated markets, which are more affected by increases in natural gas prices.
- In 2023, coal-fired power plants generated 69% of Kentucky’s electricity. Historically, more than 90% of Kentucky’s electricity came from coal-fired power plants.
- At 10.05 cents per kWh, Kentucky has the lowest electricity rates among the 26 states east of the Mississippi and the 12th lowest in the nation. Kentucky’s rates are 21% below the national average.
- Kentucky’s reliance on coal has helped maintain low electricity prices over the past two decades, especially when compared to other states in the region.
- Natural gas prices have exhibited historical volatility, often influenced by market dynamics and geopolitical events. In contrast, coal prices have remained relatively stable over the past few decades.
- Kentucky’s coal-fired power plants rely predominantly on coal mines within the region which insulates them from external price influences that affect other energy sources.
- Kentucky’s reliance on natural gas is growing and use of coal is declining. This trend could cause electricity prices to be more volatile in the future.
- Policies that promote renewable energy or require emission reductions lead to increased capital or operating costs for utilities, which are passed on to consumers in the form of higher electricity rates. Conversely, policies that support fossil fuels or limit regulatory burdens help keep prices lower, particularly in regions with coal resources like Kentucky.
