KU Announces Base Rate Increase To Meet Growing Demand
07.04.2008


Lexington, Ky. — Kentucky Utilities Company announced today that it intends to request a base rate increase to cover the costs associated with meeting the growing demand for energy. KU and its sister company, Louisville Gas and Electric Company, are investing $3 billion in construction of additional generation, environmental upgrades, and infrastructure improvements to ensure safe and reliable service.

Although the company is finalizing its calculations, KU is expected to seek a base rate increase of approximately 2 percent.

The increase in base rates is due, in large part, to the companies’ growing customer base and their increased energy usage. Since 1984, when the last KU baseload plant was built, KU’s customer base has increased more than 60 percent and energy demand on the KU system has doubled.

“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. When complete, it will be the cleanest coal-fired unit in Kentucky and among the cleanest in the United States.

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

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

In addition, KU and LG&E 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 KU 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 customer, using 1,000 kwh, is expected to see an overall increase of approximately $4.50 per month.

The companies are encouraging customers to use energy wisely by taking advantage of their new and existing energy efficiency programs. KU and LG&E 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.”

LG&E also is requesting electric and natural gas rate increases. 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 to be reached in early 2009.

Kentucky Utilities Company, a regulated electric utility in Lexington, Ky., that serves 536,000 customers in 77 Kentucky counties and five counties in Virginia.