LEXINGTON, Ky. — Kentucky Utilities Company announced today that it is requesting a $136 million base rate adjustment to cover the costs, for the most part, associated with meeting the growing demand for energy.
KU and its sister company, Louisville Gas and Electric Company, have invested more than $1.2 billion in additional generation and infrastructure improvements to ensure safe and reliable service. In addition, the utilities invested more than $133.7 million following two historic storms in 2008 and 2009. The companies are requesting that the costs associated with the fall wind storm and the winter ice storm be spread over the next five years.
With the requested 11.5 percent overall annual increase, KU's residential base rate costs per kilowatt hour would be 8 cents. The average U.S. residential rate is 11.96 cents per kWh and the average of the seven surrounding states is 9.94 cents per kWh.
A residential KU customer using an average of 1,230 kWh, is expected to see an increase of $11.85 per month based on the residential increase of 13.7 percent.
"We understand that, in this sluggish economy, any additional costs are burdensome for our customers," said Victor A. Staffieri, Chairman, CEO and President of E.ON U.S., the parent company of LG&E and KU. "We are fortunate to have some of the lowest rates in the country, and even with this proposed increase our rates will still be lower than six of the seven states surrounding Kentucky."
"However, we've made significant infrastructure investments to ensure that we continue to provide safe, reliable and clean energy. One investment is a new Trimble County generating unit, that when it comes online next summer, will be one of the cleanest coal-fired plants in the country. It will also be our lowest-cost plant to operate and will be vital in meeting the growth in demand on our system."
Since 1984, when the last KU base load plant was built, KU's customer base has increased more than 60 percent and energy demand on the KU system has doubled.
The Trimble County Two unit (TC2) is designed to meet that demand. The $1.2 billion, 760-megawatt generating unit, also will be equipped with the latest technological advances in efficiencies and environmental controls.
Along with TC2, LG&E and KU are adding more than 55 miles of transmission lines to ensure safe delivery of the additional generation load.
KU and LG&E are requesting that the cost of the two largest storms in the companies' history be spread out over five years. In the immediate aftermath of the September 2008 windstorm, 75,000 KU customers (approximately 15 percent of KU customers) and 301,000 LG&E customers (approximately 75 percent of all LG&E electric customers) were without power.
Damage to the companies' distribution systems from the September wind storm were greater than that of any other weather event ever experienced by the companies at that time. In terms of distribution facilities, KU replaced 143 utility poles while LG&E replaced 555. KU replaced 133 transformers and LG&E replaced 207. Additionally, 54 transmission poles were replaced. At the peak of restoration efforts, 2,943 employees and contractors were engaged in the restoration effort.
In late January, the companies were once again hit by Mother Nature. More than 400,000 KU and LG&E customers were without electric service. The damage throughout the service territory, including more than 20,400 downed wires and 2,293 broken poles, was unprecedented in the 170-year history of the companies. More than 6,000 restoration personnel — employees of KU and LG&E, contractors and mutual assistance workers from 21 states — worked to restore service.
Other contributing factors to this request are higher operating costs such as increased property taxes, higher insurance premiums and greater medical and pension costs as well as the effects of the economic recession.
To help offset the increases, customers are encouraged to take advantage of the Smart Saver energy efficiency programs designed to help customers reduce their energy consumption and, in turn, lower their bills, lessening the impact on the environment and delay the building of new generation.
"If customers take advantage of these programs, we expect to reduce the need for 550 megawatts of previously planned new generation by 2017," Staffieri added. "And, in turn, customers can save money and help improve the environment."
LG&E also is requesting a 12.1 percent electric base rate increase and a 7.8 percent natural gas base rate increase. The utilities will file the requested increases January 29 to be effective March 1. The Kentucky Public Service Commission has traditionally suspended the implementation of the rates for five additional months in order to hold public hearings. A decision will come by August.
Louisville Gas and Electric Company and Kentucky Utilities Company, part of the PPL Corporation (NYSE: PPL) family of companies, are regulated utilities that serve a total of 1.2 million customers and have consistently ranked among the best companies for customer service in the United States. LG&E serves 321,000 natural gas and 397,000 electric customers in Louisville and 16 surrounding counties. KU serves 543,000 customers in 77 Kentucky counties and five counties in Virginia. More information is available at www.lge-ku.com and www.pplweb.com.
