The state Public Service Commission on Thursday approved a Pennsylvania company's plan to buy Kentucky Utilities Co. and Louisville Gas & Electric Co.
The deal by PPL Corp. to purchase what's collectively called E.ON U.S. was announced in April and is valued at $7.625 billion — $6.7 billion in cash and an absorption of $925 million of debt.
The PSC's approval, though, came with a number of requirements. Among them is a moratorium on any base-rate increases by KU or LG&E until Jan. 1, 2013. The companies both were approved by the PSC for rate increases in July, despite protests by the state attorney general's office that the rate case should have been suspended until the transfer of ownership was completed.
The PSC, in its ruling, also established a procedure through which any cost savings from the transfer of ownership will be shared equally by the stockholders of PPL and customers of KU and LG&E.
Among the other requirements by the PSC are:
■ Customers are not to pay for any of the costs associated with the ownership change.
■ The headquarters of both utilities must remain in Lexington and Louisville for at least 15 years, and PPL has agreed to keep LG&E's headquarters in downtown Louisville.
■ The companies must not reduce their workforces as a result of the change, and the existing KU and LG&E management are to be retained.
■ Charitable donations and other community involvement by the companies will be maintained or increased for at least 15 years.
The purchase of KU and LG&E by PPL marks the third time in a little more than a decade that the utilities have changed ownership. In May 2000, they were bought by British company Powergen, which sold them to E.ON the next year.
KU serves 513,000 customers in 77 counties throughout Kentucky, and LG&E has 393,000 electric customers in nine counties around Louisville and 318,000 natural gas customers in 21 counties.