Dive Brief:
- Louisville Gas and Electric Co. (LG&E) and Kentucky Utilities (KU) have reached a settlement regarding a proposed rate case, both agreeing to drop plans to increase monthly service charges in exchange for small increases in power rates.
- Under the original proposal, LG&E customers would have paid $37 a month, up from $24.25 in fixed charges not related to electricity demand, WKU Public Radio reports. KU customers would have paid $18 per month, up from $10.75.
- But the utilities dropped that request in exchange for a deal under which they would charge more per kWh of energy use. Average monthly bills for LG&E customers will rise about $1.15, combined between gas and electric operations; KU bills are likely to rise $9 per month, the company estimated.
Dive Insight:
Last year, at least 23 utilities across the country attempted to increase fixed charges, according to Environmental Law & Policy Center Sr. Attorney Brad Klein. Fixed charges are seen by many in the utility industry as a way to shore up sagging revenue streams affected by stagnant load growth and the proliferation of rooftop solar.
The two PPL companies announced their intention to file a rate case last year, citing the need to replace older generation and to modernize the utilities' distribution system.
LG&E and KU both will receive some additional revenue from the settlement. KU's revenue requirement will rise $125 million; LG&E's electric operations will maintain their current revenue requirements while the gas side will rise $7 million.
The settlement states it includes a "reasonable 'black-box' compromise between the parties with respect to the revenue requirements and specific agreement with respect to other terms, and results in fair, just, and reasonable rates, terms, and conditions for all of the companies’ customers."
The two utilities will also put more than a million dollars combined to assist with low-income customers.
The method by which off-system sales are calculated will change as well. Under the new system, 75% of the revenue from off-system sales will be returned to customers in the form of a fuel adjustment. The remaining 25% will stay with the utilities.
Parties to the settlement include the Kentucky attorney general, the Kentucky Industrial Utility Customers advocacy group, the Sierra Club and several large corporations including Wal-Mart and Kroger.
