electric bills

KU to seek 6.5 percent rate increase that would raise typical bill $7 a month

Utility seeking to cover upgrades, including call center to reduce complaints

ssloan@herald-leader.comJune 8, 2012 

Later this month, Kentucky Utilities and Louisville Gas and Electric will ask the state Public Service Commission for permission to raise rates to pay for a series of generation and transmission upgrades made in recent years.

The proposal is the latest in a series of increases over the past couple of years. For KU customers, the proposal would amount to an increase of $82.4 million, or 6.5 percent. For a residential customer using 1,000 kilowatt-hours on average, a monthly bill would increase by $6.98.

"We definitely understand any increase in our customers' bills has an impact on their wallets and budgets," KU spokeswoman Chris Whelan said. "We don't make these choices lightly."

Among the improvements she cited was $338 million spent on generation upgrades, including costs related to the opening of a 585-megawatt unit at the company's Trimble County plant. Also included is an upgrade to KU's hydroelectric station at Dix Dam.

The company also has added 175 jobs, including many at a new customer call center in Morganfield to help reduce the number of complaints that spurred a PSC audit of the utility's customer service.

The proposal is the latest in a series of changes and future changes for KU customers:

■ In May, the PSC approved KU's request to spend about $800 million to build natural gas-fired power generators to replace older coal-fired units that are being phased out because of stricter federal environmental regulations. KU expects eventually to ask for a 4 percent increase in rates to pay for the new units.

■ In December, the PSC approved an increase in KU's monthly environmental surcharges to pay for upgrades to its existing plants to comply with more stringent environmental laws.

The monthly environmental surcharge increased 0.89 percent beginning this year and will jump 9.65 percent higher by 2016, according to KU. For a residential customer using 1,000 kilowatt hours a month, the monthly increase will be 69 cents in 2012, rising to $7.47 by 2016.

■ In July 2010, the PSC approved a base-rate increase that increased monthly bills by $7.31 for a residential customer using 1,000 kilowatt-hours. Among other things, the increase allowed the utility to recover the cost of repairs caused by a windstorm in September 2008 and an ice storm in January 2009.

Often in rate cases, utilities meet with other interested parties in the case, including industrial customers, environmental groups and the state attorney general's office, which represents consumers. Those meetings often result in a lower proposed increase, to which the utility agrees. The groups then present that lower rate proposal to the PSC, which then rules on it. For instance, the original proposed 2010 rate increase was $135.2 million, but KU settled for $98 million.

The PSC has 10 months from the time KU's rate application is deemed complete to make a ruling on the request, PSC spokesman Andrew Melnykovych said.

Because of that timing, the utility will be in compliance with a condition set on it when it was bought by Pennsylvania-based PPL in 2010. At that time, the company agreed to a moratorium on base-rate increases until Jan. 1, 2013.

For LG&E electric customers, the proposed increase is $62.1 million, or 6.9 percent. That amounts to a monthly increase of $7.21 for a customer using 1,000 kilowatt-hours.

For LG&E natural gas customers, the proposed increase is $17.2 million, or 7.1 percent. That amounts to a monthly increase of $3.44 for a customer using 60 Ccf.

Scott Sloan: (859) 231-1447. Twitter: @HeraldLeaderBiz.

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