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LG&E, Intervenors Agree To Smaller Utility Rate Increase In Settlement

Pratt, Liz

Louisville Gas and Electric has reached a settlement with intervenors in the company’s rate case that’s pending before state regulators.

LG&E had initially asked the Kentucky Public Service Commission to approve a rate increase that would have raised the average residential customer’s bill by about $13 a month. The settlement agreement calls for a smaller increase — about $8.24.

One of the most controversial provisions of the utility’s proposal was the way it proposed to raise those rates: not by changing the rate people pay for electricity and gas, but by changing the basic service charge. The service charge is the flat rate that all customers pay, regardless of usage.

Critics fought that plan, saying it would disproportionately hurt low-income customers, and disincentivize customer investments in energy efficiency and renewable energy.

Under the agreement, LG&E agreed to a much smaller increase: only about $4 a month for customers who use both electric and gas, as opposed to the more than $21 a month the company was seeking.

The utility will raise the electric basic service charge gradually — from $10.75 a month to $11.50 on July 1 of this year to $12.25 on July 1, 2018. The gas service charge will be raised from $13.50 to $16.35 beginning July 1.

The settlement also calls for LG&E to withdraw its proposal for deploying advanced meters across its entire territory. In a news release, the utility said it would continue its voluntary program for customers that want advanced meters and further study the issue.

“There were a large number of parties with different interests involved in this case and we are pleased to have reached a settlement that benefits our customers and their constituent groups,” said Kent Blake, LG&E and KU chief financial officer, in a statement. “The agreement gives us the ability to enhance our reliability and continue providing safe and reliable service to our customers while meeting the needs of the parties to this case.”

The agreement was reached with almost all of the intervenors in the case, including Louisville Metro Government, the Kentucky Attorney General’s Office, the Sierra Club, Kroger and the Metropolitan Housing Coalition.

Louisville Metro Government filed to intervene last year, with city officials citing their concerns about low-income residents and the city's utility bills. Metro Government spends more than $17 million each year on utility bills. In a press release, officials say they'll spend $650,000 less each year under the terms of the settlement than they would have under LG&E's original proposal.

“Our work to limit the increase on fixed charges and to the rates cities pay for street lights is a big win for everyone in Jefferson County,” said Jefferson County Attorney Mike O’Connell, who represented the city in the case.

This agreement is subject to approval by the Public Service Commission. The PSC is scheduled to consider the case on May 9.

This story has been updated.

Erica Peterson is WFPL's Director of News and Programming.