5:13pm

Tue November 8, 2011
The Commonwealth

Hearings Begin for Rate Proposal

Hearings begin tomorrow in Frankfort, as the Kentucky Public Service Commission considers a request for environmental upgrades and higher rates from Louisville Gas & Electric and Kentucky Utilities. Commissioners will also hear from a consultant who has found flaws with the request. The utility companies are proposing to spend $2.5 billion to bring their fleets into compliance with pending federal regulations. If the PSC approves the plan, those costs will be passed along to ratepayers.

Jeremy Fisher is a scientist with Synapse Energy Economics, a Boston-based energy consulting firm. He will testify in the hearing on behalf of the Sierra Club and the Natural Resources Defense Council, which are intervening in the case.

Fisher says there are shortcomings in the proposal, one of which is in the number of coal-fired units the utility is proposing to retire.

“At least according to our analysis, it would actually be in the ratepayer’s best interest if a couple of these units were actually considered for retirement rather than retrofit,” he said.

The companies also didn’t consider greenhouse gas regulation in deciding how many coal-fired plants to retire or retrofit, Fisher said.

“As far as we are aware, they are the only utility that we’ve come across in quite awhile—and looking at a range of dockets this year, they are the only utility—that does not consider the risk of greenhouse gas regulation to their coal fleet,” he said. “And it’s a very serious risk.”

Fisher says it’s also short-sighted of the company to not consider any renewable sources of energy in its analysis.

The hearing is expected to last for two days, though it could be extended. Commissioners have until mid-December to rule on LG&E and KU’s plan.