LG&E settles rate hike request. How much your KY power bill will go up
AI-generated summary reviewed by our newsroom.
- LG&E and KU cut proposed hikes in half Oct. 20 through agreement with KY AG.
- Residential bills rise modestly: LG&E electric $5, gas $8; KU electric $9.
- Settlement adds $235M in annual revenue and freezes base rates until August 2028.
Kentucky Utilities and Louisville Gas & Electric customers will see smaller rate increases to their monthly bills next year after reaching an agreement with the attorney general that will cut proposed rate hikes in half.
LG&E residential customers will see their electric bills increase about $5 per month and their gas bills increase by about $8 per month starting Jan. 1, according to the Oct. 20 settlement that sought to prevent double-digit rate increases. Residential KU customers will see their electric bills increase by $9 per month.
The Public Service Commission, the state body that regulates utility rates and projects, still needs to approve the settlement before the rate changes go into effect.
The settlement agreement was proposed by Kentucky Attorney General Russell Coleman, after multiple agencies and companies raised concerns. Joining the agreement were the local governments of Lexington and Louisville, Kroger, Walmart, federal agencies, Kentucky Industrial Utility Customers and the Sierra Club, an environmental activist group.
“The Attorney General’s Office has a duty to protect Kentuckians’ affordable and reliable energy,” Coleman said in a statement. “This agreement is a win on both fronts as we head into the winter months.
More than 1.3 million people in Kentucky are customers of the utility company. As part of the settlement, the utility companies have agreed to maintain their base rates until August 2028.
“This agreement keeps families’ residential rates low, but it also protects Kentucky’s competitive energy prices that encourage new economic investment and future job creation,” Coleman said.
The rate increase, first submitted to the Public Service Commission in May, is the first time in five years LG&E and KU have asked the state’s utility regulators to allow them to increase rates.
The company said raising the rates was to meet their operating expenses and provide a reasonable rate of return while service is maintained and upgrades are made to aging power lines, poles and substations.
“Kentucky has a very open and transparent regulatory process that allows for customer input and representation, and this process enables thoughtful discussion and extensive reviews among the parties involved,” said LG&E and KU President John R. Crockett III in a statement.
“We understand any increase to customers’ bills is impactful and not a decision we take lightly. ... This agreement would allow us to continue making necessary system enhancements, upgrade aging equipment and enhance service for our customers,” Crockett said.
Stakeholders filed to intervene almost immediately after LG&E and KU submitted paperwork for the rate increase. Public comment meetings began Sept. 8 in Louisville and across the state through Oct. 16.
Under the original proposal, residential KU customers would have seen an increase to their monthly bill of around $18. Monthly rates for LG&E electric and gas customers would have increased by around $11.
Through those original rate adjustments, KU sought an increase of approximately $226 million per year in its electric revenue, while LG&E requested an increase of nearly $105 million per year in its electric revenue and almost $60 million per year in its gas revenue.
The settlement’s rate increases result in an additional $58 million in revenue for LG&E’s electric service, $45 million for its gas service and $132 million for KU’s electric service.
“Over the last five years, as inflation increased nearly 20% and labor and material costs escalated, LG&E and KU worked hard to hold down costs,” a release from the utility companies said. “The current requests remain well below the rate of inflation, underscoring this commitment to providing safe, reliable and affordable service. Residential electric rates would remain more than 24% below the national average.”
The Oct. 20 deal follows a summer agreement with the attorney general that allowed LG&E and KU to extend the lifespan of two coal plants and continue talks for natural gas plants and a battery storage facility. In that case, LG&E and KU are asking Public Service Commission if they can spend $3 billion on the infrastructure for the projects.
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