Tentative settlement reached in LG&E and Kentucky Utilities rate hike case

Bill increases will be reduced

Future energy bills won’t be quite as steep for LG&E and Kentucky Utilities customers thanks to the intervention of several public interest groups.

The groups announced this week a negotiated settlement with the two monopoly utilities that reduces the revenue increases they sought by one third, increases investment in bill assistance to low-income residents, and eliminates proposed increases to the flat monthly service charge that would have affected all residential gas and electric customers. 

The settlement comes with a mixture of relief and satisfaction but also ongoing concerns for unresolved and anti-consumer issues. It must be approved by the Kentucky Public Service Commission.

“Our interest has always been protecting low-income residential customers, and we feel that many stipulations in this agreement do that,” noted Cathy Kuhn, executive director of Metropolitan Housing Coalition. “In addition to achieving significant reductions in the overall gas and electric rate hikes, the companies agreed to no increase in the fixed customer charge, the amount customers pay regardless of how much energy they use. 

"This was an important win, because the increase in the fixed charge would have disproportionately impacted low-income residents, female-headed households with children, households with disabilities, and communities of color.”

Notably, the parties did not reach an agreement on the utility’s plan to slash by 80 percent the value of the credit that rooftop solar customers receive for energy their systems provide to the grid. Testimony on the solar net-metering dimensions of the case will be considered by the Kentucky Public Service Commission, which is also weighing a similar but different net-metering proposal from a third utility, Kentucky Power. 

Andy McDonald of the Kentucky Solar Energy Society stated, “KYSES was especially focused on the utilities’ proposed changes to net metering, which was the one issue which was not resolved in the settlement. We will continue to work for fair solar net metering rates as this issue goes to hearing.”

The coalition of public interest groups intervening in this case included Kentuckians For The Commonwealth, Metropolitan Housing Coalition, Mountain Association and Kentucky Solar Energy Society. The groups were jointly represented by Tom FitzGerald of the Kentucky Resources Council. Together they pooled resources to hire expert witnesses who provided written testimony and analysis to the Kentucky Public Service Commission on issues affecting low- and moderate-income residential customers and small businesses, energy efficiency,and rooftop solar.

The groups also informed and organized affected ratepayers from many communities across Kentucky to submit written and verbal public comments. 

“Kentuckians are fortunate to have strong grassroots organizations who pull together to protect ratepayers and our health and climate from unreasonable actions by monopoly utilities,” said Cassia Herron, chairperson of Kentuckians For The Commonwealth. “But we are deeply disappointed by the office of Kentucky Attorney General Daniel Cameron, which took a position in this case in support of the utilities’ efforts to slash the value of rooftop solar energy. And to city leaders who also intervened in this case, we say ‘Thanks, but there is much more work to do to protect the needs of residents and advance locally-owned, clean, and affordable energy.’” 

A summary of significant agreements reached in the tentative settlement include:

1. Kentucky Utilities will receive 32 percent less revenue than they asked for, while Louisville Gas and Electric will receive 40 percent less revenue than it sought from its electric customers.

2. Residential bills will rise by far less than the original proposal. For LG&E and KU customers, average monthly electric bills will rise by about 7 percent, compared with increases of about 11 percent in the original proposal. LG&E gas customers will see a 6.4 percent average increase on their monthly bill, compared to 9.4 percent in the original proposal.  

3. The utilities dropped their plan to increase the fixed meter charge that all residential customers pay each month, regardless of how much energy they use. This was a key demand of the public interest groups.

4.  The utilities agreed not to raise rates again for four years, unless public policies affect their business model. 

5. The utilities agreed to increase shareholder contributions to bill relief for low income customers by 7 percent, matching the 7 percent increase in average residential bills.

6. The utilities agreed to evaluate the costs and benefits of an on-bill financing program, which is an innovative approach to financing energy efficiency upgrades with no upfront costs for residential customers. They also agreed to evaluate peak-time rebates, which would give participating customers monetary credit for voluntarily reducing energy use during periods of high demand for electricity on the grid system. 

7. The settlement allows the utilities to begin deploying Advanced Metering Infrastructure (AMI), but at no additional cost to customers until after new meters are in use, and only if utilities can prove net costs in a future rate case. Also, no change in data use policies or utility cutoff policies will go into effect until that future case.

Walmart, Kroger and some local governments also were intervenors in the case.

Having resolved many issues affecting ratepayers in this case, the public interest groups will continue to engage Kentuckians and the Kentucky Public Service Commission in the days and weeks ahead to protect the future of rooftop solar in the Commonwealth. That part of LG&E and KU’s rate case was carved out of the settlement agreement and will be considered separately by the Commission.   

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