KU rates could drop slightly

Kentucky Utilities has reached a settlement that would slightly lower customers' electricity bills, the company announced Tuesday.

With two discounts coming off bills, however, the end result could be close to a wash.

Last July, KU asked the state Public Service Commission to approve an increase that would have pushed up residential electricity bills by 7.3 percent, or $4.50 a month for the average customer.

Instead, the settlement would lower that average electricity bill by 60 cents, the company said.

The two discounts that are going away have been on bills for several years. They reflect savings from the company's merger with Louisville Gas & Electric and use of best management practices. Losing those discounts should just about balance the rate decrease, meaning customers are unlikely to see much of a change in their monthly bills, said Chris Whelan, a spokeswoman for E.ON U.S., parent company of both KU and LG&E.

LG&E also was part of the rate increase request. The average LG&E electricity bill would go down about $1 a month under the settlement. The average LG&E gas bill would increase $5.10 a month.

KU provides electricity to 536,000 customers in 77 Kentucky counties. LG&E has 401,000 electricity customers and 326,000 natural gas customers in Louisville and 16 surrounding counties.

The settlement comes after negotiations with the state attorney general, the Kentucky Industrial Utilities Customers, the Lexington-Fayette Urban County Government, The Kroger Co. and advocates for low-income residents.

It must still be approved by the PSC, which began hearing details of the proposed settlement Tuesday and will hear more Thursday.

If approved, the rate reductions could begin as early as Feb. 6.

When KU asked the PSC for higher rates, it said the money was needed to cover $3 billion in investments, including $1.2 billion for a 750-megawatt generating plant in Trimble County. Although it is an LG&E plant, it's meant mainly to serve KU customers.

The company also said it needed more revenue because it is adding 60 miles of transmission lines and making environmental improvements at three other generating plants.

Whelan said that, though the company needed the additional money, the settlement was "the right thing to do." Lower rates won't mean less service, she said.

"It's going to affect our bottom line," she said.