Kentucky Utilities has taken the first step in a months-long process to request an increase in electric rates because of the costs to restore power after last winter's ice storm.
The company, which provides electricity to nearly half a million homes and businesses, filed a request with the state Public Service Commission last week asking it to agree that the storm's costs are the type of costs that can be passed along to customers through a rate increase.
If the commission, which regulates Kentucky Utilities, agrees, the utility would then need to file a request for the rate increase.
Under KU's proposal, it would eventually raise bills $1.55 a month for the typical residential customer using 1,000 kilowatt hours. The increase would be for five years, which is the time the utility says it would take to recover the full costs from the storm.
The company also plans to ask for a rate increase to recover costs related to last year's windstorm, which would be 10 cents a month, spokeswoman Chris Whelan said.
It cost KU about $62 million to restore power during the ice storm, when 199,000 customers were without power at the peak of the outages. The windstorm, which saw peak outages of 76,000, cost the utility $2.6 million, Whelan said.
Those costs don't include the normal cost of operation for the utility, she said. It focuses just on costs such as bringing in 7,000 extra workers from more than 20 states. It also includes the 81,000 meals that the extra workers were served, Whelan said.
The company normally budgets for repairs, but "obviously, the windstorm and the ice storm were extraordinary circumstances."
The proposed rates also don't reflect the costs of certain materials, including 2,200 poles that broke and were replaced, as well as power lines. Those, she said, are capitalized over a period of years and will be included at a later time.
There is no set time limit for the PSC to rule on KU's request. PSC spokesman Andrew Melnykovych said the commission ruled within a couple of months on KU's request that the windstorm costs be treated as the type of asset that would make it eligible for an increased rate.
No rate-increase filing has yet been made in that case.