LOUISVILLE, Ky. — Louisville Gas and Electric Company announced today that it is requesting a $94.6 million base electric rate adjustment, for the most part, to cover costs associated with meeting growing demand for energy, and a $22.6 million natural gas base rate increase.
LG&E and its sister company, Kentucky Utilities 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 annual 12.1 percent overall increase, LG&E's residential base rate costs per kilowatt hour would be 8.3 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 electric customer using an average of 992 kWh, is expected to see an increase of $8.92 per month based on the residential increase of 12.2 percent. A residential natural gas customer, using an average of 58 Ccf, is expected to see an increase of $4.65 per month based on the 8.7 percent adjustment.
"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 1990, when the last LG&E base load plant was built, LG&E's customer count has increased more than 20 percent, and energy demand on the LG&E system has increased by 40 percent.
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. It also includes enhancements to our electric and natural gas distribution system including upgrades at gas compressor stations, improvements to enhance the gas supply to downtown Louisville and a long-term gas main replacement project and pipeline integrity testing initiative.
LG&E and KU 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, 301,000 LG&E customers (approximately 75 percent of all LG&E electric customers) and 75,000 KU customers (approximately 15 percent of KU 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, LG&E alone replaced 555 utility poles, while KU replaced 143. LG&E replaced 207 transformers and KU replaced 133. 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 LG&E and KU 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 personnel — employees of LG&E and KU, 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 to 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."
KU also is requesting an 11.5 percent electric 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 an additional five months in order to hold public hearings. A decision will come by August.
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LG&E is a wholly-owned subsidiary of E.ON U.S. LLC that serves 314,000 natural gas and 389,000 electric customers in Louisville, Ky., and 16 surrounding counties.
