Schools prepare to fight proposed utility rate increase fearing a $500,000 bill

An electric power substation off Loudon Ave. in Lexington in 2011.
An electric power substation off Loudon Ave. in Lexington in 2011.

In anticipation of a utilities rate hike, Fayette County Public Schools board members voted to ask the state’s School Boards Association to represent them before the state’s Public Service Commission.

Kentucky Utilities and Louisville Gas & Electric have announced plans to ask for a rate increase before the state Public Service Commission. The amount of the proposed rate increase will be announced by Sept. 27, said KU spokeswoman Chris Whelan.

The increase is needed for “safety and reliability and to ensure that we continue to invest in our system,” Whelan added.

In the past, the Kentucky School Boards Association has represented multiple school districts in rate case interventions and lowered the requested rate increase. It has also helped acquire grants and special funds for energy efficiency initiatives, said the Fayette County School district’s energy engineer Logan Poteat.

For example, when KU won approval of a rate increase in 2017, the Kentucky School Boards Association was successful in getting a “school-only rate.” The new rate saved the district $200,000, said Poteat.

But Whelan said the “school-only rate” was only a temporary pilot program for a limited number of schools and may not be available again.

“It was paid for by the rest of the customers. You and I and every other customer basically covered those costs. Obviously that’s a big benefit to the schools but it’s a detriment to our other customers,” said Whelan.

A study required by the PSC showed that schools did not use energy differently than any other customer in their particular class or group, she said, adding that the PSC will be asking about schools, “Is it fair to all the other customers to give them a discount?”

Poteat said if KU asks for a six percent rate increase as the company did last year, it could cost the Fayette district more than $500,000.

“They are asking to increase rates on top of getting rid of our school-only rates,” said Poteat.

Because the Kentucky School Boards Association was concerned that local school districts could be disproportionately affected, that group is asking each district to contribute to the costs of attorneys fees and professional witnesses in the rate case intervention.

Eric Kennedy, director of governmental relations for the Kentucky School Boards Association, said Kentucky school districts cannot afford a big utility bill.

“Every cent is precious in every school district and classroom of the state in this budget cycle,”’said Kennedy. “Every penny saved from utility expenses is freed up to be invested in classroom instruction and student support.”