LG&E agrees to proposed settlement limiting increase in fixed service charge

Louisville Gas & Electric has entered into a settlement agreement to lower its proposed fixed utility rate hike before the Kentucky Public Service Commission, which city leaders called a win for ratepayers.

LG&E first proposed its rate hike for Louisville-area customers to the PSC in November, intending to increase annual revenue by $107 million by doubling its fixed monthly charge for residential customers, yet implementing a small decrease to its usage rate. This proposal was met with swift opposition by consumer advocates, Louisville Metro Council and Mayor Greg Fischer, who argued the fixed rate hike was excessive and regressive, creating an undue burden on low-income residents and discouraging investments in energy efficiency and solar panels. Metro Council passed a unanimous resolution urging the city to intervene against the rate hike, which is what Mayor Fischer did by directing Jefferson County Attorney Mike O’Connell to represent Louisville Metro Government in the PSC case — the first time the city has done so in decades.

Under the proposed settlement reached by all of the parties to the case on Wednesday — which still must be approved by the PSC at their hearing next month — LG&E agreed in principle to lower its annual revenue increase from $107 million to just shy of $67 million. Whereas its original proposal called for increasing the monthly fixed service charge — the amount paid regardless of the amount of energy used — for residential customers using electric and gas from $24.25 to $46, this amount would now only be increased to $27.85 starting July 1 and $28.60 a year later.

Mayor Fischer released a statement that the settlement “protects LG&E customers of all types but also supports the utility in providing safe and reliable service for its users. Louisville Metro’s efforts in this case benefit all cities within Jefferson County and the rest of the LG&E service area.”

O’Connell was involved in settlement negotiations last week in Frankfort, stating in the press release that “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. Listening to the input of our citizens, the Mayor and other city officials, along with members of Metro Council, guided me throughout this case. I hope that the PSC views this stipulation as fair, just and reasonable and ultimately approves it.”

Councilman Bill Hollander, D-9, who sponsored the resolution urging the city to intervene in the PSC case, issued a statement applauding that rare intervention.

“Louisville Metro should be at the table whenever a utility seeks an increase in what it charges our residents”, said Councilman Hollander. “That’s particularly important when a utility is proposing a massive increase in monthly basic service charges that disproportionately affect low-income individuals and reduce incentives for energy conservation. I am glad that Metro Council encouraged intervention and that Louisville Metro was at the table representing our residents.”

Fellow PPL Corp. subsidiary Kentucky Utilities — serving 516,000 customers outside of the Louisville region — was also part of the rate hike proposal before the PSC and agreed to settlement conditions to lower their increases as well. The Office of Rate Intervention in the Kentucky Attorney General’s office was part of the settlement with both companies, which included the withdrawal of LG&E’s $511 million smart meter project investment.

“My office clearly understands the need for utility companies to maintain their infrastructure to better serve ratepayers, but the settlement reached with my office will lessen the impact to Kentuckians by not passing on excessive costs in ways that would be crippling to hundreds of thousands of ratepayers,” said Attorney General Andy Beshear in a press release.

Mayor Fischer’s press release also touted a $200,000 increase in LG&E’s contribution to the Association for Community Ministries for low-income utility assistance, a commitment to fund a study on the deployment of electric bus infrastructure in Louisville and Lexington, and a commitment to discuss issues related to LED street lighting equipment and rate structures.

Metro Council GOP caucus director Steve Haag issued the following statement regarding the settlement:

“We are pleased that a settlement has been reached. The reduction of the increase to a much more manageable amount of $4.00 per month versus the over $20.00 that was proposed by LG&E will hopeful lessen the hurt some working families will feel. We are glad that the Metro Council could come together and work with the Jefferson County Attorney’s Office to oppose this increase, and hope it will lead to even more cooperation on the Council.”