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LG&E Customers To See Smaller Rate Increase Following Settlement

Photographer: Dwight Burdette

Louisville Gas and Electric and Kentucky Utilities customers can expect their utility bills to increase at a lower rate following a settlement deal with opponents of the rate increase.

The agreement lowers the proposed rate increase by about $78 per year for a typical LG&E customer with gas and electric, assuming the Public Service Commission agrees to the proposal. If approved by the PSC, the new rates will take effect July 1.

Residential Customers

The average LG&E customer with both electricity and gas can still expect to see their bill increase by about $96 a year for the first year, and about $137 every year after that. That change is due to a one-year economic relief bill credit that utilities proposed to help mitigate the increase for the first year of the new rates.

Under the agreement, LG&E won’t change the current residential basic service charges, and agrees to not raise base rates again for at least four years. LG&E also agreed to increase contributions to assist low-income customers.

The settlement doesn’t address the rate that rooftop solar customers can expect to receive for the excess power they put back on the grid.

Commercial Customers

Louisville Climate Action Network Executive Director Sarah Lynn Cunningham said small businesses will also have bigger bills under the settlement.

Commercial electric customers would see flat service fees increase 11% to 12% depending on the size of their service, while consumption rates would increase 14%. Commercial gas customers would see an increase of 17% to 20% in flat fees and 6% in usage rates, Cunningham said.

Cunningham is concerned that small businesses have not had their voices adequately heard in the rate case.

“I do think that this is enough to put people out of business, certain businesses that use a lot of power,” Cunningham said.

Settlement Agreement

The utility’s agreement to reduce the increase was reached with more than a dozen different parties including Attorney General Daniel Cameron, the U.S. Department of Defense advocates for low-income customers such as the Mountain Association.

Cameron’s office said the settlement would save ratepayers more than $113 million over the utility’s original proposal.

In a press release, LG&E said the increases will help the utility invest in safe and reliable service for customers, including upgrading power lines, gas lines and substation equipment.

“These are difficult and sometimes emotionally charged topics, further complicated by the more challenging conditions presented by COVID-19,” said LG&E and KU Chief Financial Officer Kent Blake. “However, all parties worked together in a professional manner to ease the impact on customers to the extent possible, while still providing the utilities an opportunity to recover their costs of providing safe and reliable service.”

Homeless and Housing Coalition of Kentucky Executive Director Adrienne Bush said the settlement is an improvement on the original proposal, but continues to saddle low-income customers with an additional financial burden at a time when customers are already trying to dig themselves out of the debt caused by the pandemic.

“This provides some stability, in terms of, we kind of know what to expect now,” Bush said. “But overall, we don’t feel like this rate increase is necessary at this point.”

Ryan Van Velzer is the Kentucky Public Radio Managing Editor. Email Ryan at rvanvelzer@lpm.org.

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