LG&E Announces Base Rate Increase To Meet Growing Demand
07.04.2008


Louisville, Ky. — Louisville Gas and Electric Company announced today that it intends to request electric and natural gas base rate increases to cover the costs associated with meeting the growing demand for energy. LG&E and its sister company, Kentucky Utilities Company, are investing $3 billion for construction of additional generation and infrastructure improvements to ensure safe and reliable service.

Although the company is finalizing its calculations, LG&E is expected to seek an electric base rate increase of approximately 2 percent. LG&E is also requesting a 5.9 percent increase in its natural gas base rates.

The increase in base rates is due, in large part, to the companies’ growing customer base and their increased energy usage. Since 1990, when the last LG&E baseload plant was built, LG&E’s customer base has increased more than 20 percent, and energy demand on the LG&E system has increased by more than 40 percent.

“We’re making significant investments in our infrastructure to ensure that we continue to provide safe and reliable energy for our customers,” said Victor A. Staffieri, Chairman, CEO and President of E.ON U.S., the parent company of LG&E and KU. “In order to ensure we continue to meet the needs of our customers and the increasing environmental demands, we are in the midst of unprecedented construction activity at LG&E and KU.”

The largest of these investments, at $1.2 billion, is a new, high-tech generating unit in Trimble County, Ky. The 760-megawatt generating unit will be equipped with the latest technological advances in efficiencies and environmental controls. “TC2” – as it’s called – is being built mainly to meet the growing energy needs of Kentucky Utilities customers who pay a pro rata share of the expenses. When complete, it will be the cleanest coal-fired unit in Kentucky and among the cleanest in the United States.

Along with TC2, LG&E and KU are adding more than 60 miles of transmission lines, an updated transmission control center and environmental improvements at three generating stations.

Additionally, LG&E and KU are upgrading their distribution infrastructure including major substations in Lexington, Louisville, Horse Cave, and Shepherdsville.

LG&E is also improving its natural gas system. Some of those include 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.

In addition, LG&E and KU have received approval from the KPSC to phase into customers’ base rates, the merger and value delivery surcredits. In doing so, customers will no longer see the line item credits on their bill, but will receive all of the savings associated with these cost-saving initiatives. This means that LG&E electric and gas customers will see base and overall rate increases that are lower than they would have been had these savings not been achieved and provided to customers.

A residential electric customer, using 1,000 kwh, is expected to see an overall increase of approximately $5.20 per month, while a gas customer, using 70 Ccf, is expected to see an overall increase of approximately $11 per month.

The companies are encouraging customers to use energy wisely by taking advantage of their new and existing energy efficiency programs. LG&E and KU recently received approval to expand their energy efficiency offerings by 168 percent. The programs are designed to help customers reduce their energy consumption and, in turn, lower their bills, lessen the impact on the environment and delay the building of new generation.

“It’s our hope that we can reduce the need for 550 megawatts of previously planned new generation by 2015 through these new programs,” Staffieri said. “The benefits will be long-lasting for our customers and the environment if we all learn to use energy wisely.”

KU also is requesting an electric base rate increase. The utilities will file the increases July 29. The Kentucky Public Service Commission has traditionally suspended the implementation of the rates for five months in order to hold public hearings. A decision is likely in early 2009.

LG&E is a wholly-owned subsidiary of E.ON U.S. LLC that serves 326,000 natural gas and 401,000 electric customers in Louisville, Ky., and 16 surrounding counties.