Kentucky’s two largest cities, the state attorney general and some environmental and industrial stakeholders are backing a proposed settlement of a rate-increase request by the state’s largest utility.
The settlement would scale back the requested increase in electricity rates for residential customers.
The proposed settlement submitted by Louisville Gas and Electric and Kentucky Utilities (LG&E and KU) to state utility regulator Kentucky Public Service Commission (PSC) came after negotiations with a number of parties.
The commission must approve the settlement which a group of nonprofits is opposing, saying it would allow the utility to bill customers for millions in construction costs without advance approval from the PSC.
LG&E and KU President John Crockett in a published statement said “any increase to customers’ bills is impactful and not a decision we take lightly.”
“Our employees, who are also our customers, work hard to operate and maintain our systems to be among the best in the nation. This agreement would allow us to continue making necessary system enhancements, upgrade aging equipment, and enhance service for our customers,” Crockett said in his statement.
The utility — which serves about 771,000 customers in Louisville, Lexington and more than 90 other counties — requested a rate increase earlier this year, saying the revenue is needed to replace or improve transmission, metering, and information technology infrastructure. The Public Service Commission has held public hearings in Lexington and Middlesboro, with another hearing scheduled in Madisonville, to hear from ratepayers about the requested rate increase.
Under its original request, the utility said monthly residential bills for KU and LG&E customers using an average amount of electricity would increase by about $18.15 and $11.04 respectively. Under the settlement, the utility says, the monthly increases would be $9 for KU and $5 for LG&E customers. The settlement would also specify that the utility would not seek another increase in rates until at least August 2028.
Republican Kentucky Attorney General Russell Coleman, the local governments of Lexington and Louisville, the Sierra Club, Kentucky Industrial Utility Customers, the U.S. Department of Defense, Walmart, and Kroger agreed to the proposed settlement.
Coleman, the attorney general, said in a press release that the settlement would “lock in” rates and is “a win on both fronts as we head into the winter months.”
“This agreement keeps families’ residential rates low, but it also protects Kentucky’s competitive energy prices that encourage new economic investment and future job creation,” Coleman said.
A press release from The Sierra Club, an environmental organization, stated LG&E and KU had reduced its initial rate increase request after an “outcry at public hearings.” The group criticized investments by the utility in fossil fuels-based technology, including gas-fired power plants and “aging coal plants” that are “bad for the climate and bad for our wallets.”
“While LG&E and KU’s settlement is a small step toward easing rate hikes, rates still go up, and those are real costs to everyday Kentuckians,” said Elisa Owen, the Beyond Coal Campaign senior organizer for the group in Kentucky. “People across our state are already choosing between heating their home, powering their lights, affording medication, or feeding their children.”
“Like at the public hearings on these proposed rate increases, we will continue to show up and hold LG&E and KU accountable to serving Kentucky families first, not as an afterthought,” Owen said.
Matt Mudd, press secretary for Louisville Mayor Greenberg, said “Louisville joined the City of Lexington, the Sierra Club, and others in signing on to the agreement because it cut proposed rate increases by half, kept rates from being increased for another three years, added new renewable energy options for industrial customers, secured solar incentives for homeowners, and increased maintenance for city streetlights.”
But a group of nonprofits focused on housing, energy efficiency, renewable energy, and advocating for low-income ratepayers is skeptical the settlement will keep rates stable into the future. Byron Gary, an attorney for the environmental legal group Kentucky Resources Council, is representing groups that did not agree to the settlement including Kentuckians For The Commonwealth, Kentucky Solar Energy Society, Metropolitan Housing Coalition, and the Mountain Association.
Gary in a statement said because of the addition of new “riders” in the settlement, the utility would be able to collect a higher return on investment from ratepayers than what is listed in the settlement and “pass through millions of dollars of construction costs for new electric units without advance review by the public and the commission of the prudency of those expenditures.”
“The total costs of these additions largely offsets any settlement savings, and if approved, ratepayers will continue to see their actual rates rise despite the supposed lock in,” Gary said.
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Written by Liam Niemeyer. Cross-posted from the Kentucky Lantern.
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