Leaving the front porch light on just got more expensive in Lexington.
The Kentucky Public Service Commission, a state agency that regulates public utilities, approved an 8.8 percent rate increase Tuesday for the average residential customer of Kentucky Utilities Company.
The increase takes effect immediately.
The average KU residential customer will pay $112.85 a month for electricity, or $9.17 more than the previous rate of $103.68.
Overall, Kentucky Utilities will collect an additional $125 million, or 7.9 percent, in annual revenue. The utility company had requested an increase of $155 million per year, about 2.7 percent more than the PSC approved.
The utility had asked to increase the flat fee it charges all customers, but regulators instead approved an increase in the cost per unit of electricity.
Increasing the cost per unit of electricity rather than the flat monthly rate promotes energy conservation and allows people to have more control over their utility bill, environmentalists and advocates for the poor argued.
"It was good news for us and for the environment here in Kentucky," said Ramesh Bhatt, a volunteer with the Sierra Club. "The way they have structured their finances would have punished people who were trying to be efficient."
The rate increase will help pay for a variety of investments by KU, including a $563 million gas-fired electric power plant in western Jefferson County. Kentucky Utilities owns 78 percent of the plant, which went into service in June and is replacing a coal-fired plant.
The money also will help pay to expand the hydroelectric McAlpine Dam in Louisville.
Customers of Louisville Gas & Electric, a sister company of KU that is also owned by PPL Corporation, will see less severe monthly increases in their gas and electric bills.
LG&E customers will pay about 5 cents more a month for electricity and $1.31 more a month for natural gas. LG&E had asked for an additional $14 million in revenue, but will receive $7 million from the settlement.
Officials with KU and LG&E said they were happy with the settlement, and that it was a compromise between all parties, which included the Sierra Club, Kroger Company, the Lexington-Fayette Urban County Government and the Kentucky Attorney General's office, which represents the interests of ratepayers.
The Public Service Commission said the increases are "fair, just and reasonable," based on the utilities' operating expenses and borrowing costs.
Both utility companies filed for the increases in November 2014. Public hearings were held in Louisville and Lexington leading up to the settlement.
Kentucky Utilities has about 512,000 electric customers in 77 counties. LG&E has about 400,000 electric customers in Louisville and 320,000 natural gas customers in 17 counties.