Settlement in LG&E/KU Rate Cases Protects Vulnerable Residential Customers

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A proposed settlement agreement in the Louisville Gas and Electric and Kentucky Utilities Rate Cases, filed with the Public Service Commission on April 17, 2017, includes a number of positive outcomes for residential customers in the LG&E and KU service areas.

The numerous intervenors in one or more of the cases, including the Office of the Attorney General, Metropolitan Housing Coalition (represented by KRC), Association of Community Ministries, JBS Swift, Sierra Club, Louisville Metro (represented by County Attorney Mike O?Connell), Lexington, and the Community Action Council, negotiated as a unit in seeking to moderate the rate increases sought by LG&E and KU.

LG&E sought 94.1 million in new revenue for electricity and 13.4 million for gas operations, and KU sought a revenue increase of $103.1 million for electricity. Both sought to increase by more than double the basic customer charge, and to marginally reduce the volumetric rates for electricity. LG&E and KU also sought to fully roll-out advanced (“smart”) meters. Among the highlights of the settlement for LG&E customers:

• LG&E and KU withdrew the request to roll out advanced meters on a mandatory basis, and will instead work in a collaborative with interested parties to review and make recommendations on how and when to deploy advanced meters.

• The overall revenue increases for LG&E would drop to $59.4 million for electricity and for KU, 54.9 million, and to $7.5 million for gas services, and the allocation of what classes of customers will pay the increased revenue was made more fair than was under consideration.

• The return on equity was reduced to single digits, at 9.75%.

• The customer charge will rise from $10.25 per month to $11.50 in July 2017 and to $12.25 in July 2018, instead of the $22.00 requested by LG&E. For gas customers in the LG&E service area, the meter charge will rise to $16.35 for the next two years.

• The residential service charges will not be split into three components, which renewable advocates were concerned was a step towards decoupling and demand charges that would adversely affect distributed solar generators.

• LG&E and KU have agreed to fund a study on deployment of electric buses in Louisville.

• LG&E will increase low-income customer support from shareholder contributions by an additional $200,000 per year for utility assistance through the Association of Community Ministries until June 30, 2021, for a total shareholder contribution to 880,000 overall for utility and home energy assistance. KU will increase their shareholder contribution by $100,000, and an increase in the service charge of 5 cents (to .30) will help reduce the number of folks on the waiting list for heating assistance in the CAC service area.

KRC appreciates the support of other intervenors, and particularly of JBS Swift, for the concerns of Metro Housing Coalition and low-income customer advocates. KRC also appreciates LG&E and KU’s willingness to take a step back on the advanced meter issue and to work collaboratively on it.

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By Kentucky Resources Council on 04/20/2017 5:32 PM
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