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New Rates Take Effect For LG&E, KU Customers

New base rates for gas and electricity take effect this month for customers with Louisville Gas and Electric and Kentucky Utilities, according to an order issued by the Public Service Commission on Wednesday.   

The average residential customer with LG&E will see base rates for electricity increase by about 7%, or $6.75 per month, and base rates for gas increase more than 5%, or about $3.55 per month. But they’ll catch a break for the first year, because utility regulators also approved a one-time economic relief credit amounting to $53.5 million, minimizing the rate increases through July 2022.

As part of that deal, LG&E has agreed not to raise base rates again for another four years. 

State utility regulators ultimately set rates lower than what LG&E/KU had initially applied for, which would have meant an additional $8 per month on the typical gas and electric bill. The new rates went into effect July first.  

The Public Service Commission also gave LG&E approval to deploy advanced metering infrastructure, also known as smart meters, across their service territory, which includes about 1.3 million customers. 

Smart meters enable two-way communication between the home and the central system, so the utility can better monitor customers’ energy consumption in real time. LG&E spokesperson Chris Whelan says the smart meters also benefit customers.

“The approval to fully deploy [advanced metering infrastructure] will empower customers with their detailed and personalized energy usage data and will help utilities better respond to and restore power outages,” Whelan said. 

The smart meters won’t cost customers anything, though utility regulators authorized a 9.4% return on equity for LG&E’s electric and gas operations -- meaning the utility will see profits for the capital investment of implementing the smart meters across its territories. 

The order requires LG&E to implement pre-pay and demand-side management programs to help low-income customers after LG&E has rolled out the smart meters. 

The Public Service Commission also requires LG&E/KU to study and propose tariffs for electric vehicle charging for homes and businesses.  

“Given the inherent advantages incumbent utilities have by the nature of their monopoly status, the Commission cautions the companies against making unreasonable, unnecessary, or unfair [electric vehicle] infrastructure investments,” according to the PSC’s press release. 

The commission held off on establishing new rates for net-metering customers, the credit rooftop solar customers receive for the electricity they put back on the grid. 

PSC spokesperson Karen Wilson wrote that LG&E/KU and intervening parties in the rate case failed to provide sufficient evidence to change the rate from the current one-to-one credit. The commission has until September to make a decision on those rates. 

Back in May, the commission set the net metering rate for a different utility, Kentucky Power, at a little more than 9 and a half cents per kilowatt hour. That’s less than the one-to-one retail rate Kentucky Power customers received previously, but more than Kentucky Power wanted to pay to solar generators.


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

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