A proposed settlement in Kentucky Utilities' request to raise the environmental surcharges on monthly electrical bills might mean a smaller increase for customers.
The utility filed a notice with the state Public Service Commission this week saying it had agreed to delay certain environmental projects at the E.W. Brown power plant, reducing the potential price increase for customers. The settlement was agreed to by the other companies and organizations involved in the case, such as the state attorney general's office, which represents consumers.
The PSC may accept, reject or modify the agreement and must rule by mid-December, spokesman Andrew Melnykovych said.
Under the proposed settlement, the monthly environmental surcharge would increase 0.89 percent starting in 2012 and be 9.65 percent higher by 2016, said KU spokeswoman Chris Whelan. For a residential customer using 1,000 kilowatt-hours a month, the monthly increase would be 69 cents in 2012, rising to $7.47 by 2016. That's down from KU's initial proposal, which called for monthly increases of $1.13 in 2012 up to $9.46 in 2016.
Behind the reduction is the decision to forgo certain improvements at the Brown plant on the banks of Herrington Lake. The utility had planned to install systems to better control particulates, part of a series of changes at multiple plants to comply with revised federal environmental regulations. But the federal rule regarding those systems at Brown has been delayed until 2013.
"We've agreed to wait until we get a clearer picture of that final rule before we do anything," Whelan said, emphasizing that KU sees the move as simply a deferral of the $225 million in costs that would have been incurred.
The utility still will be converting a wet storage facility at Brown to a dry landfill and making some minor modifications, she said. And KU will continue with its plan for roughly $712 million in improvements at its plant north of Ghent along the Ohio River.
Beyond that, KU has asked in a different case for permission to spend as much as $800 million to build natural gas-fired power generators to replace older coal-fired units as part of complying with the revised environmental rules. KU expects to eventually ask for a 4 percent increase in rates to pay for the units. That case is pending before the commission.
As part of this week's settlement proposal, KU also has agreed to donate an additional $250,000 from shareholder profits to its home energy assistance programs. If the settlement is approved by the commission, Whelan said, $125,000 would be donated during this winter heating season and the remainder would be donated next year. That amount is on top of the roughly $120,000 KU donates from shareholder money annually, she said.
"We were pleased to give ... in a season where the economy is bad and (federal heating assistance) funds have dwindled," she said. "This will help our vulnerable customers pay their heating bills."