The Kentucky Public Service Commission will allow Louisville Gas & Electric and Kentucky Utilities to raise their utility rates, but not as much as was agreed to in a settlement in April.
The order issued today will raise a typical LG&E customer’s electric bill by about $6.42 a month. The bill for a typical LG&E gas customer will increase by about $6.98. This is slightly less than was agreed to in the settlement, and nearly $5 a month less than LG&E had initially requested.
KU customers will see their bills increase by $3.85 a month, rather than the $7.16 the utility had initially proposed.
The PSC also reduced the return on investment LG&E and KU’s shareholders are guaranteed — from 9.75 percent to 9.70 percent — and isn’t allowing the utility to recover costs for some employee retirement savings contributions from ratepayers.
One of the most controversial provisions of LG&E’s initial proposal was the way the utility proposed to raise customers’ rates: not by changing the rate people pay for electricity and gas, but by changing the basic service charge. The service charge is the flat rate that all customers pay, regardless of usage. Right now, for customers who use both electric and gas the charge is $24.25 a month, before the lights or heat go on. The utility wanted to raise that to $46.00 a month, while also slightly reducing the usage charges.
Critics fought that plan, saying it would disproportionately hurt low-income customers, and disincentivize customer investments in energy efficiency and renewable energy.
The new plan which LG&E and intervenors agreed to in the settlement, and remains virtually unchanged in the PSC’s orders, includes a much smaller increase in the basic service charge. Now, customers will pay $28.60 a month in charges, though the rates paid for electricity and gas will increase slightly from current rates.
“While we are still reviewing the details of the order, the ruling gives us the ability to enhance our reliability and continue providing safe and reliable service to our customers while mostly meeting the needs of the parties to this case,” said LG&E and KU chief financial officer Kent Blake in an emailed news release.
A number of parties intervened in the case, including Louisville Metro Government, the Kentucky Attorney General’s Office, the Sierra Club, the Metropolitan Housing Coalition and Kroger.
In a separate news release, Jefferson County Attorney Mike O’Connell praised the PSC order. He represented Louisville Metro Government in the case.
“The Public Service Commission upheld nearly every provision of the agreement that Louisville Metro Government and the other interveners reached with LG&E,” O’Connell said. “The PSC commissioners have stated this revised settlement represents rates that are fair, just and reasonable for customers. I hope that LG&E will honor the PSC’s decision.”
This story has been updated.