‘Financial assault’ on the horizon: Ky utilities want to raise rates in a pandemic

As if the last 12 months of a COVID pandemic have not presented enough challenges for Kentuckians trying to make ends meet, now there is another financial assault on the horizon. Kentucky Utilities (KU) and Louisville Gas and Electric (LG&E) have applied to the Kentucky Public Service Commission (PSC) for rate increases.

Consider how the proposed rate increases would affect KU residential customers. The basic daily service charge would increase 15 percent and the energy use charge would increase 11 percent. Disconnect fees would increase and solar households would see the value of their net-metering credit slashed. This would come on top of increases in the basic charge of 14 percent and the energy rate of 2 percent in June 2017. KU also increased the basic charge by 32 percent and the energy rate by 0.4 percent in April 2019.

How much can low-income and fixed income Kentuckians bear? Of the 77 counties served by KU, five are among the fifty counties in the country with the lowest median household income. The utility is bold, indeed, to ask for a third rate increase in four years — this last request in the midst of pandemic-related unemployment and underemployment.

The rate increases are unfair in several ways. Customers who now conserve energy use in order to decrease expenses or out of concern for their environmental impact would still have higher utility bills, so there would be less incentive to practice conservation and to use energy-efficient practices and appliances. Shouldn’t a utility company be concerned with encouraging good energy stewardship?

Since 2017, the basic meter charge has increased 50 percent, compared to an energy charge increase of 1 percent. Increasing the per-meter charge disproportionately impacts persons living in apartments or small houses because they generally use less electricity, compared to those living in larger houses.

And neighborhoods with a high density of smaller homes tend to be lower-income and racially segregated. Since the housing is denser, it follows that the density of utility meters is much greater than in higher income, whiter neighborhoods of big houses. In effect, the low use customers are subsidizing the utility’s cost of providing electricity to high use customers. It’s not merely economic inequity, but also racial inequity.

A third unfair aspect is KU’s random plan to cut — by almost 80 percent — the rate used to credit solar customers for energy they provide to the grid. No reasoning is given for the low rate, and the benefits of cheap energy supplied by solar customers during summer peak use times is unacknowledged. The decreased rate would make it very difficult to recover the cost of a solar array during its limited useful lifespan.

As Kentucky is 49th in the US in solar power utilization, the possibilities for independent rooftop solar are unfathomable. The economic potential is great — both with regard to good-paying jobs and electricity sales. This is a selfish move by KU to limit competition by suppressing the minute, negative monetary effect of net-metering, squelching the dreams of potential solar customers, and killing small, local solar companies. Should KU and its investors be allowed to dictate the rules so they control access to and are the sole beneficiaries of low-cost, renewable solar energy?

Finally, many Kentuckians are facing disconnections and evictions because of economic hardship caused by the pandemic. Wouldn’t a 32 percent increase of the utility disconnection fee unnecessarily inflict more pain?

To be fair and reasonable, any rate increase should encourage energy efficiency and conservation by maintaining a low basic per-meter charge and only increasing the charge for energy units consumed. Good rate design should not unfairly impact low-income customers or persons of color. Furthermore, the utility monopoly should not be permitted to smother residential solar energy use or unfairly stifle independent solar businesses. The rate increases must be denied.

Janie Wills is a retired pharmacist and lifelong learner.