Emission line observations together with photoionization models provide important information about the ionization mechanisms, densities, temperatures, and metallicities in AGN-ionized gas. Photoionization models usually assume Maxwell-Boltzmann (M-B) electron energy distributions (EED), but it has been suggested that using kappa distributions may be more appropriate and could potentially solve the discrepancies in temperatures and abundances found in HII regions and Planetary Nebulae (PNe). We consider the impact of the presence of kappa distributions in photoionized nebulae associated with AGN and study how this might affect spectral modelling and abundance analyses for such regions. Using the photoionization code MAPPINGS 1e we compute models adopting M-B and kappa distributions of electron energies, and compare the behaviour of emission line ratios for different values of kappa, gas metallicity, density, ionization parameter and SED slope. We find that the choice of EED can have a large impact on some UV and optical emission lines emitted by photoionized nebulae associated with AGN, and that the impact of adopting a kappa distribution is strongly dependent on gas metallicity and ionization parameter. We compile a sample of line ratios for 143 type 2 AGN and compare our models against the observed line ratios. We find that for 98 objects kappa distributions provide a better fit to the observed line ratios than M-B distributions. In addition, we find that adopting kappa-distributed electron energies results in significant changes in the inferred gas metallicity and ionization parameter in a significant fraction of objects.