Kentucky Utilities customers will pay extra each month to cover environmental upgrades at the company’s power plants under a settlement approved Monday.
The amount will vary each year covered by the settlement, which lasts through 2024.
In 2016, the estimated additional monthly surcharge will be 30 cents for the average KU residential customer, rising to $1.37 a month in 2017 and $2.32 in 2018, according to the Kentucky Public Service Commission.
The surcharge will peak in 2022 at an estimated $3.32 a month, the PSC said in a news release.
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The average monthly residential bill for KU customers — which doesn’t include surcharges and taxes — is $112.85, according to the PSC.
KU and Louisville Gas & Electric, which are owned by the same company, filed requests earlier this year to spend more than $900 million to comply with new federal rules on storage of coal ash and on limiting emissions of mercury and other toxic substances from coal-fired power plants, the PSC said.
The PSC on Monday approved a settlement worked out by the utilities, the Kentucky Attorney General’s Office, which has authority to intervene in utility rate cases, and an association of large industrial users of electricity.
The commission cut the return the utilities will be allowed to earn on the investments, according to the news release.
The settlement also created a longer period for KU to recoup costs, which will reduce the initial rate increase, the PSC said.
Under the settlement, KU will spend about $675 million for projects that include closing coal-ash ponds at its Ghent power plant in Carroll County and at closed coal plants in Woodford, Bell and Muhlenberg counties, the PSC said.
Coal ash, which contains toxic substances such as metals, is a by-product of burning coal to make electricity.
The PSC said the settlement also will cover other environmental-compliance construction, including improved emissions controls at KU’s coal-fired E.W. Brown power plant in Mercer County and Ghent plant in Carroll County.
LG&E will spend about $300 million for environmental projects, including closing coal-ash ponds.
KU has about 518,000 customers in 77 Kentucky counties. LG&E has about 400,000 electric customers in nine counties in the Louisville area, in addition to more than 300,000 gas customers.