LG&E meter

A Louisville Gas & Electric residential electricity meter.

LOUISVILLE, Ky. (WDRB) -- A deal reached Monday would reduce Louisville Gas & Electric and Kentucky Utilities' proposed rate hike by about a third and prevent the utilities from implementing another price increase until July 1, 2025.

But hundreds of thousands of utility customers are still looking at substantial bill hikes beginning this summer.

The deal brokered by Attorney General Daniel Cameron's office means that LG&E customers in the Louisville area are likely to see the combined bill for electric and gas service rise about 5% starting in July, to $173.19 on average. Then in July 2022, the combined bill will rise to $176.59 on average, a 6.8% increase from today's prices. 

LG&E had sought increases that would have raised the combined bill by about 11%.

A unit of investor-owned PPL Corp., LG&E has raised rates six times in since 2008. This will be the seventh increase in 13 years.

Made with Flourish

Cameron, whose office represents the interests of everyday people when Kentucky's regulated utilities seek to raise their prices, was unavailable for an interview Tuesday, according to his spokeswoman.

"As the watchdog for Kentucky ratepayers, we pursued a settlement with LG&E and KU that saves Kentuckians more than $113 million in proposed utility rate increases and ensures the companies will not impose an additional rate increase before July 1, 2025," Cameron said in a press release.

The deal still must be approved by the Kentucky Public Service Commission, but it has been agreed to by the utilities and all the other entities involved in the dispute, including Louisville and Lexington metro governments and consumer, environmental and housing groups.

The deal is a "reasonable compromise" reached after two days of negotiations conducted Thursday and Friday, LG&E chief financial officer Kent Blake said in a document filed Monday with the commission.

The agreement comes just a week before the commission, a three-person board appointed by Kentucky's governor, was set to begin hearings in which it was to decide whether and how much increase LG&E & KU are allowed.

"The reality is that there was probably always going to be some sort of a rate increase. So I think our efforts were to try to minimize that," said Cathy Kuhn, executive director of the Louisville Metropolitan Housing Coalition, which advocates for low-income people. MHC was a party in the rate hike case and endorsed the settlement.

If it takes effect, LG&E would charge its average residential customer 7.2% more for electric service and 6.4% more for gas usage, according to Cameron's office. That's less than the 11.8% LG&E had sought for electric customers and the 9.13% sought for LG&E gas users.

It wasn't immediately clear when new rates will take effect, but LG&E and KU had been targeting July. The increases in the first year would be somewhat offset by an "economic surcredit" that will phase out in mid-2022, as the utilities proposed when they first unveiled the rate hike last November.

No hike in fixed charges

In what Kuhn called a significant victory, the settlement keeps the utilities from making any changes to their basic service charges -- the fixed monthly fee that electric and gas customers pay regardless of whether they use any energy. LG&E had sought to hike the fixed fees from $33 per month today (for the residential customer with electric and gas service) to $39.

In recent years, LG&E and KU have sought aggressive increases in fixed charges. The utilities say customers will benefit from less volatile bills and that they have fixed expenses to cover.

But critics say the minimum monthly charges give consumers less power to reduce their bills and less incentive to make their homes more efficient or reduce their energy consumption.

“Preventing an increase in the fixed customer charge was a clear message we heard from our citizens and city officials,” Jefferson County Attorney Mike O'Connell, who represents Louisville Metro in the case, said in a statement. “This agreement delivers a win for everyone in Jefferson County as no residential customers will see an increase in their minimum monthly charge."

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2021 WDRB Media. All rights reserved.