Settlement reached in KU, LG&E rate case

A proposed settlement may mean lower rate increases by Kentucky Utilities and Louisville Gas and Electric.

The utilities announced Monday that a unanimous settlement had been reached by the other companies and organizations involved in the rate case, such as the state attorney general's office, which represents consumers.

If the settlement is approved by the Public Service Commission, the new rates would go into effect Jan. 1.

Under the terms of the settlement, KU's base rates will increase by $51 million annually. That's nearly 40 percent below KU's original request of $82.4 million.

For KU customers using 1,000 kilowatt-hours monthly, their bills would increase $4.82, or about 5.8 percent. That's 31 percent below the original proposed monthly increase of $6.98.

"We're pleased with the settlement," said Lonnie Bellar, vice president of state regulations and rates for the utilities. "There is a diverse group of interests represented in this case and they worked hard to develop an agreement that balanced the needs of everyone."

The utilities, which are owned by Pennsylvania-based PPL Corp., asked for the rate increases earlier this year to pay for a series of generation and transmission upgrades made in recent years.

Among the improvements cited by KU was $338 million spent on generation upgrades, including costs related to the opening of a 585-megawatt unit at the company's Trimble County plant. Also included is an upgrade to KU's hydroelectric station at Dix Dam.

The company also has added 175 jobs, including many at a new customer call center in Morganfield to help reduce the number of complaints that spurred a PSC audit of the utility's customer service.

The proposed settlement also includes some additional changes for KU customers.

If approved, the late payment charge would be reduced from 5 percent to 3 percent and due dates would be extended to 16 business days.

That would make it at least 22 calendar days before a late payment charge would be applied, the utility said.

Under the agreement, LG&E's base electric rates would increase $33.7 million, down from $62.1 million in the original request. Customers using 1,000 kilowatt-hours would see their monthly bills increase $4.31.

LG&E's base natural gas rates would increase $15 million, down from the $17.2 million originally requested. Customers using 6 Mcf would see their monthly bills increase $3.53.