Lexington customers will keep paying elevated utility bills after state OKs rate hike
Kentucky’s two largest utility companies have secured the state’s permission to keep electricity and natural gas rates elevated for a million customers in 93 counties.
The Kentucky Public Service Commission largely agreed Monday with a deal Kentucky Utilities and Louisville Gas and Electric struck with customers and the state attorney general’s office in October in a hotly contested case to raise the companies’ rates for the first time since 2020.
The new rates are actually slightly lower than settlement rates, which took effect on an interim basis Jan. 1.
KU, which serves the Lexington-metro area and more than half a million customers statewide will charge customers a little more than 6.5% more for power than this time last year, meaning the average residential customer using 1,085 kilowatt-hours of electricity will pay $8.73 more.
LG&E, the Louisville-metro area’s primary provider was approved for a 4.7% power hike and 11% natural gas boost, leaving average customers paying $5.14 more for electricity and $8.27 more for gas.
On average, the approved rates are about 10 cents cheaper per month for the average customer than the rates implemented at the start of the year. As such, customers will receive credits on their bills over the next two months to make up the difference.
Power bills have been on the rise across Kentucky as utilities grapple with increased costs and the temptation of industrial tech customers demanding more power. Eastern Kentucky customers now pay some of the highest rates in the region, which drew a rare rebuke from Kentucky Attorney General Russell Coleman this month.
Both companies, which are subsidiaries of Pennsylvania-based PPL Corp., initially sought much larger hikes. KU originally asked for an 11.5% increase, while LG&E sought 8.3% more for its electric service and 14% from its natural gas customers.
The PSC order, signed Monday, bars both companies from asking for any additional increases until at least 2028 and grants most of the details of the settlement brokered by the Kentucky Attorney General’s Office.
The companies were not granted a proposed sharing mechanism that would have allowed them to recover additional revenue during a major build-out phase. Regulators said the companies did not provide enough evidence for sufficient oversight.
LG&E/KU have launched an aggressive power plant construction campaign to support an expected influx of high-demand industrial customers like data centers. The PSC OK’d a joint petition in November the companies said would result in a more than $3 billion allocation to construct two new natural gas plants.
The PSC order also introduced additional protections on generation cost riders beyond what had been agreed to by both companies, the AG’s office, Kentucky Industrial Utilities Customers, Walmart, Kroger, the U.S. Department of Defense, Sierra Club and the Lexington and Louisville metro governments.
Joint interveners that did not sign off on the settlement applauded the PSC for “reasoned decision-making.”
The companies’ customers “are completely without choice: We cannot safely choose to go without electricity; we cannot choose who provides our service; we cannot choose a cheaper provider,” Kentuckians for the Commonwealth member Catherine Clement said. “We are glad the PSC is more properly weighing the public interest over the interests of shareholders.”
The companies say they need the additional revenue to cover infrastructure upgrades and address rising operational costs, including those associated with severe weather events.
This story was originally published February 17, 2026 at 3:54 PM.
