PSC will take public comments in LG&E ‘smart meters’ case

A smart meter | Courtesy of PPL, parent company of LG&E and KU

The Kentucky Public Service Commission has agreed to hold a public meeting to receive public comments and provide information on the request by Kentucky Utilities and Louisville Gas & Electric to deploy “smart meters” to their 1.3 million customers over the next five years, at an estimated cost of $350 million.

The PSC had originally not planned on having a public hearing, but reversed course on Tuesday after requests made by the Metropolitan Housing Coalition — an affordable housing advocacy nonprofit that has intervened in this PSC case — and letters in the past two weeks from state Representatives Attica Scott and McKenzie Cantrell, two Louisville Democrats.

MHC, Scott and Cantrell all argued that Louisville consumers of LG&E would be on the hook for the majority of the costs of such smart meter deployment and maintenance, which they said would exceed $350 million once the utility companies’ return on capital investments was added in, and therefore deserve the opportunity to make their voices heard directly by those deciding the case.

The smart meters that KU and LG&E are seeking approval from the PSC to deploy to homes and businesses contain read transmitters that send real-time data on customers’ power use.

LG&E had proposed a $511 million smart meter deployment in 2016 as part of a larger request to double the fixed monthly charge for residential customers, but withdrew that PSC request in a 2017 settlement. The rate increases were strongly opposed by consumer advocate groups, the Attorney General Andy Beshear and Louisville Metro Government, with Beshear adding that his office found “little support” that smart meter deployment would benefit ratepayers.

In their current PCS case submitted in January, the companies argue that while the initial installation and operating costs of the smart meters is $350 million, there would be no immediate hike in customers’ rates, as these costs “would be more than offset by the savings and benefits advance meters provide over their lifetime.”

In addition to allowing customers to better track their energy use and improving responses to power failures, KU and LG&E say that these savings would come from reducing the cost of in-person meter readings and “nontechnical losses” from system malfunctions and theft of service.

However, the interveners in the case, including the Office of the Attorney General, dispute such assertions that smart meter investments will pay for themselves and not be paid for by future rate hikes to customers.

Cathy Hinko, the executive director of MHC, told Insider Louisville that the supposed savings that LG&E states are created by smart meters in its PSC filing are actually “speculative,” “illusory,” and not backed up by data from other cities where they have been deployed.

Hinko said that the savings in nontechnical losses claimed by LG&E are actually “a series of guesses” and “mystery savings,” as no other jurisdiction using smart meters has shared whether the predicted savings from eliminating theft and malfunction came to reality, and this amounts to half LG&E’s predicted savings.

While some have health concerns about the advanced meters, Hinko said that the larger issue is likely privacy, as there is a question of whether customers’ detailed and real-time data use can be obtained like that of cellphone use. While California has strict standards and procedures in place for when law enforcement can obtain such data, she says that LG&E has no apparent policy in place to provide such safeguards.

But if consumers decide to opt out from having a smart meter installed, they will pay big. LG&E electric and gas customers will each have to pay a one-time fee of $57.85, plus a recurring monthly fee of $22.70 and $21.80, respectively.

A newsletter from MHC went further by stating that LG&E is so determined to deploy smart meters because that “it is the only way to get extra profit,” as they will get return on investment on their capital expenditures.

“MHC recommends that before we move forward in forcing customers to pay $380 million for the Advanced Metering System, we find out how much jurisdictions currently using AMS have saved, with actual concrete data, no speculative projections,” stated the nonprofit.

But according to the attorney general’s office, the $350 million or $380 million figure is just scratching the surface of what consumers will have to pay for, as this only represents the initial capital investment of smart meters and what the companies will initially spend on their operations and maintenance.

When factoring in the recurring expenses and capital costs, the attorney general’s office cites the utility companies’ own chart amended to their original filing as stating that they will actually recover over $716 million from customers over the life of the project.

Paul Alvarez, a utility consultant testifying on behalf of the attorney general’s office, told the PSC in May that the companies’ cost-benefit analysis claiming smart meters would pay for themselves was off, arguing that they overstated their savings and benefits by hundreds of millions of dollars, while also understating their costs by hundreds of millions of dollars.

In a statement to Insider, Beshear said that his office intervened to protect consumers who are faced with “ever-increasing energy costs.”

“The companies are requesting approval to retire early and replace more than 950,000 meters at a cost of $716.6 million,” stated Beshear. “Kentucky families will be expected to pick up that tab in future rate cases. Given that those families are already struggling to pay their bills, I will oppose this request.”

The public meeting announced this week by the PSC will be held on Monday, July 9 in Room 6 of the Founders Union Building on the University of Louisville’s Shelbyhurst campus. The meeting will open at 5:30 p.m. with a presentation on the case by PSC staff and a question-and-answer session, followed at roughly 6:30 p.m. by the public comments session.

“This meeting is an opportunity for affected ratepayers to make their views known directly to the commission,” stated PSC Chairman Michael Schmitt in a news release. “The PSC encourages ratepayers to attend the information session to gain a more complete understanding of how Kentucky law requires the PSC to evaluate and arrive at a decision in matters such as this.”

Public comments will also be taken at the beginning of the PSC’s formal evidentiary hearing in the case on the morning of July 24 at the agency’s Frankfort office, and written comments will be accepted through the conclusion of that hearing.

Rep. Scott told Insider she was pleased the PSC decided to allow public comments in Louisville, as her request “was simply responding to the very valid concerns of my neighbors to both the financial impact and a transparent process.”