LG&E Plans to Ask For Rate Increase, Partly to Pay for Cane Run Gas Plant

Louisville Gas and Electric officials plan to file documents with the Public Service Commission later this month asking for a rate increase.

If approved, the proposed rate increase will raise the average residential customer’s electric bill by $2.74 a month, and increase the average gas bill by $2.60 a month.

LG&E spokeswoman Natasha Collins said the increase is necessary to pay for some of the company’s recent large projects and improvements.

“The base rate adjustment that we’re requesting would ultimately allow us to continue some of the ongoing infrastructure projects and improvements that we have to do things like reduce emissions, to meet the environmental mandates that have been set forth by the Environmental Protection Agency, and also to improve reliability as well as to have a more balanced generation portfolio for the company,” she said.

One of those projects is the natural gas power plant that’s being built adjacent to the current coal-fired Cane Run plant. When the 640 megawatt natural gas plant is complete—estimated in May 2015—the coal plant will be retired.

Collins verified that some of the new proposed rate increase stems from the natural gas plant. When the project was approved, LG&E officials told both WFPLand the Kentucky Public Service Commissionthat they didn’t expect it to necessitate rate hikes.

As I reported in 2011:
The company decided it would be cheaper to replace the coal plants with natural gas than to install advanced pollution controls on the aging units. [LG&E spokeswoman Chris] Whelan says if the deal is approved by the Public Service Commission, it won’t affect the rate increase that’s pending or future LG&E rates. “Based on the allocation of energy, the new plant is not expected to increase LG&E’s rates,” she said. “This particular filing is just for the application to get approval to actually build something, but even then we’ve estimated that LG&E will not see an increase.”
In the past decade, the PSC has approved four rate increases that affect LG&E customers. Those changes have increased the electric bill of the average LG&E customer (using about 1,000 megawatts a month) by $11.22 a month. The average customer’s gas bill has increased $21.56 a month.