8:17am

Fri December 16, 2011
Environmental Watchdog

PSC Approves Utility Rate Increases

The Public Service Commission has accepted the settlement reached by Louisville Gas & Electric, Kentucky Utilities and various other parties that will allow the utilities will to begin installing technology to comply with new pollution requirements. The companies will be allowed to recover the costs through rate increases.

The settlement—agreed to last month—is a little bit different than what the utilities originally wanted. It defers pollution controls at the aging E.W. Brown plant in Harrodsburg, which environmental groups hope will hasten the plant’s retirement. The settlement also slightly reduces the rate of return the company’s investors will get from the new facilities, and increases the money the company will put into low-income energy assistance programs.

But some of the big aspects of the proposal weren’t changed. LG&E will install pollution controls at its Mill Creek and Trimble County power plants, but the Cane Run Power Station in Louisville and Kentucky Utilities’ Green River and Tyrone plants will be retired. A separate proposal before the Public Service Commission proposes replacing some of that capacity with natural gas.

PSC Spokesman Andrew Melnykovych says this agreement is a little more complicated than a typical rate case, because the utilities have to upgrade their units in order to comply with upcoming federal pollution requirements.

“Essentially, PSC has to approve that plan if it makes the finding that it’s a least cost, reasonable plan,” he said. So there’s much less flexibility than what you would get in a general rate case, for example.”

Under the $2.3 billion settlement, rates will increase by about 18 percent for LG&E customers by 2016 and nearly 10 percent for KU customers.