LG&E serves 318,000 natural gas and 390,000 electric customers in Louisville and 16 surrounding counties. KU provides electricity for 518,000 customers in Bell and 76 other Kentucky counties, and five counties in Va. LG&E and KU are Kentucky’s two largest regulated utilities and are both owned by E. ON, a company based in Lousiville. LG&E and KU had submitted a combined $69 million in proposed rate increases for gas and electric customers to the Public Service Commission (PSC) for its approval. The PSC sets rates for public utilities in Kentucky. The Office of the Attorney General intervenes on behalf of ratepayers in front of the PSC.
“Negotiating this case was one of my top priorities because I know, with today’s economic climate, many Kentuckians are having trouble making ends meet and simply can’t afford the type of rate increases proposed by these utilities,” General Conway said.
“Settling these cases is the right decision,” said Vic Staffieri, Chairman, CEO and President of E.ON U.S., the parent company of LG&E and KU. “As with any negotiation, there is give and take on both sides. In this case, while we continue to believe our original requests were reasonable, the differences between the parties were significant. The settlement allows for a modest reduction in residential electric customers’ bills while allowing us to recover some of our costs for improvements to our natural gas system.”
Terms of Settlement
LG&E electric had requested a rate increase of more than $15 million. But the typical LG&E residential customer will see electricity rates decrease by $12 a year. The settlement secured a more than $13 million decrease in current electricity rates for residential consumers — a net savings of more than $28 million.
KU requested a more than $22 million increase in electricity gas rates. Attorney General Conway and his staff opposed that request, and ratepayers will actually see their rates decrease by $8.9 million from the current rates — a total savings of more than $31 million. The typical KU residential customer will see its rates decrease by $7.20 a year.
LG&E gas submitted a $29.8 million proposed increase in its natural gas rates. Under the negotiated settlement, natural gas rates would increase by $22 million — a net savings of almost $8 million for residential ratepayers. The rate increase compensates LG&E for its increased costs of delivering natural gas to customers. The typical LG&E residential gas customer will see an increase of $5.10 per month.
LG&E and KU also agreed to several provisions to assist low-income customers. Those provisions include: providing $300,000 a year to heating assistance programs, lengthening payment plans for customers who require deposits to secure service, and the possibility of waiving late fees for some pre-certified consumers. There will be a hearing on January 13, 2009 at 10 a.m. at the PSC, which must approve the terms of the settlement. According to the settlement, the new rate structure would take effect on February 6, 2009. The settlement agreement is still subject to KPSC review and approval.
“I am pleased that E.ON worked with my office, in good faith, to provide some much-needed relief for families in Kentucky,” General Conway said.
Stephen Woodward is a Staff Writer for the Daily News. He may be contacted at swoodward@middlesborodailynews.com.
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