The Kentucky Public Service Commission on April 30 said that it has set new base rates for Kentucky Utilities (KU) and Louisville Gas & Electric (LG&E) at levels lower than those sought by the utilities.
The commission said that KU will receive an additional $55.88m in revenue per year, compared to the $112.46m requested by the utility. LG&E’s base rate electric revenue will increase by about $2.1m, the commission said, adding that the utility had requested an additional $34.89m in annual electric revenue. LG&E had requested an increase in its annual revenue from natural gas operations of $24.92m, the commission said, noting that in its decision, it set the increase at about $18.64m.
The commission noted that the approved rates are the product of a partial settlement between the utilities and other parties to the case, as well as commission decisions on matters left unresolved by the settlement, including the decision to bar certain utility employee retirement benefits from being reflected in rates.
With the new rates, the base rate portion of a typical LG&E residential electric bill will increase by about 27 cents per month, while the base rate portion of the monthly bill for a typical KU residential customer will increase by about $4.27, the commission said.
Service charges will increase for KU and LG&E residential electric customers, the commission said, adding that KU residential customers will see a slight increase in the electric usage charge, while LG&E residential electric customers will see a slight reduction.
A typical LG&E residential natural gas customer will see a $3.70 increase in the base rate portion of the monthly bill, with increases to the service charge and delivery charges, the commission said, noting that the base rates do not include the cost of the gas itself. The gas cost is adjusted every three months to reflect – on a dollar-for-dollar basis – the amount that LG&E pays for gas on the wholesale market, the commission said.
Monthly bills will also be affected by the expiration of credits reflecting the impact of the federal corporate income tax rate reduction that took effect in 2018, the commission said, adding that those tax impacts now will be reflected in base rates. Expiration of the credits will add $3.84 per month to a KU residential customer’s bill, on average, the commission said. For LG&E residential customers, monthly electric bills will increase by an average of $3.30, and monthly natural gas bills by an average of $2.21, when the tax adjustment credit expires, the commission said.
In its two separate orders for LG&E and KU, the commission said, for instance, that the parties to the rate case stipulation agree to a return on equity (ROE) of 9.725%, applied to capitalization.
Chris Whelan, vice president of Communications and Corporate Responsibility, with LG&E and KU, on May 1 told TransmissionHub: “Yesterday’s order on our rate review was consistent with our expectations. We have a number of planned projects that are key to continuing to provide customers safe and reliable energy and this will allow us to move forward with those projects.”
Whelan said that overall, from January 2018 to October 2019, the companies are investing $2.2bn in infrastructure improvements to benefit customers, including investments in such areas as equipment that detects outages, stronger poles and wires, as well as more durable gas lines.
“Customers have already seen increased reliability in their electric and natural gas service as a result of these investments,” Whelan said. “Additional improvements are expected as work continues. LG&E and KU work to ensure customers receive reasonably priced energy and, even with this increase, LG&E and KU’s rates remain among the lowest in the nation.”