Revised agreement in LG&E case keeps limited increases in fixed monthly charges and to rates for residential ratepayers and Louisville Metro’s utility bills

June 22, 2017

Jefferson County Attorney represented Louisville Metro Government in settlement

An agreement reached between Louisville Gas & Electric (LG&E) and Louisville Metro Government that significantly reduced a proposed utility rate increase was accepted with minor modifications Thursday by the Kentucky Public Service Commission (PSC).

Louisville Metro Government, along with a number of other intervenors in the case before the PSC, reached a settlement on April 19 that was more than $40 million below LG&E’s initial request for new revenue and included a drastic cut to LG&E’s proposed fixed monthly charges of $46 for residential customers who have both electric and gas service. The PSC upheld those provisions, and further reduced LG&E’s new revenues by approximately $4 million.

Jefferson County Attorney Mike O’Connell, in his authority as legal representative for Louisville Metro Government, has personally represented the city in the case, including settlement negotiations held in Frankfort in April.

“I take great pride that my office and I worked for more than six months to limit the impact this rate case would have on utility bills for Louisville Metro Government and for all residents in Jefferson County,” said County Attorney Mike O’Connell. “Without our efforts, customers would have experienced an additional $45 million in annual rate increases and seen a dramatic increase in LG&E’s fixed rate charges. In addition, we were able to help secure additional support for low-income customers.

“The Public Service Commission upheld nearly every provision of the agreement that Louisville Metro Government and the other interveners reached with LG&E. The PSC commissioners have stated this revised settlement represents rates that are fair, just and reasonable for customers. I hope that LG&E will honor the PSC’s decision.”

LG&E asked the PSC in November to grant an increase to its electric and gas rates that would boost the company’s annual revenues by $107.5 million. Louisville Metro Government intervened in the case on December 2 and presented facts and expert testimony that called for a substantial cut to LG&E’s request. The new rates are set to go into effect July 1.

Louisville Metro’s intervention paid especially high dividends in the debate over the fixed electric service charge. LG&E proposed to more than double the current service charge of $10.75 to $22 per meter. This increase raised concerns about impacts on low-income families, seniors and others living on fixed income, and from those in Louisville who had invested in energy conservation efforts, including solar technology. The high level of proposed increases in fixed charges was a significant factor in Louisville Metro’s decision to intervene.

The fixed monthly charge for electric service will now be $12.25, nearly $10 a month less than LG&E’s request.

Louisville Metro spends more than $17 million annually on utility bills. Following the settlement in April, Louisville Metro estimated $650,000 in cost avoidance for its utility bills compared to LG&E’s original rate increase request.

This case marked Louisville’s first significant intervention in a LG&E rate case heard before the PSC in more than 30 years. Of the Louisville Metro Council members present and voting on Dec. 15, they unanimously approved (20-0) a resolution in support of intervention. Councilmen Bill Hollander and Kevin Kramer both have offered written testimony in the case.

Other notable pieces of the settlement that the PSC upheld include an increase of $200,000 (up from $500,000) for low-income customer support through a contribution to the Association for Community Ministries; an electric bus infrastructure and rates study; and a LED lighting collaborative focused on reducing the costs that cities spend on street lights.

Full details on the revised agreement can be found on the PSC’s website at the following link:

http://psc.ky.gov/agencies/psc/press/062017/0622_r01.pdf