Utilities' surcharge increases will be lower than expected

The three coal-fired units along Herrington Lake opened in 1957. KU plans to spend $402 million to comply with new regulations.
The three coal-fired units along Herrington Lake opened in 1957. KU plans to spend $402 million to comply with new regulations. Photo courtesy Kentucky Utilities

Kentucky Utilities and Louisville Gas and Electric announced Thursday that increases in the environmental surcharges on monthly electrical bills will be lower than expected.

The utilities received approval late last year from the state Public Service Commission for a series of increases to the monthly surcharges to offset the costs of power plant upgrades needed to comply with federal environmental standards.

Under the approved plan, KU's monthly environmental surcharge was to be 9.7 percent higher by 2016, but now the increase is expected to be no higher than 6.6 percent. For a residential customer using 1,000 kilowatt hours a month, what would have meant a $7.50-a-month increase in 2016 is now expected to be a $5.10 increase.

"Receiving timely approvals from the Kentucky Public Service Commission and the other regulatory agencies allowed our employees to negotiate and secure the most economic deals possible," Victor Staffieri, chief executive officer of the companies, said in a statement. "As a result, customers will benefit from the lower cost increases for these environmental compliance requirements.

"We realize that customers' bills are still increasing, but in these tough economic times, it's nice to be able to pass along some savings to our customers."

Under the approved LG&E plan, monthly environmental surcharges were expected to rise 18.3 percent, with a customer using 1,000 kilowatt hours monthly paying $15.60 more by 2016. That's now expected to be an increase of 12.8 percent, with the bill increasing by $10.90.

Kentucky Utilities is expected to request some additional increases in the environmental surcharges. Under the previously approved plan, the company delayed certain environmental projects at its E.W. Brown power plant at Herrington Lake, reducing the price increase for customers. The utility had planned to install systems to better control particulates, but the federal rule regarding those systems has been delayed until 2013.

The utility agreed to wait to get a clearer picture of the rule before doing anything, but spokeswoman Chris Whelan said the company sees it simply as a deferral of the $225 million in costs that would have been incurred.