LG&E's proposed bill hikes are larger than they appear

LOUISVILLE, Ky. (WDRB) – Louisville Gas & Electric Co. customers are looking at significantly bigger increases in their monthly bills next year than the estimates the power company has been providing to local media over last few months.

The utility, which serves Jefferson and 16 surrounding counties, has often said the average residential customer’s electric bill would rise by $4.23 – and the average gas bill by $4.93 – under rate increases that LG&E is asking regulators to approve for implementation next spring.

But a closer look at LG&E’s filings with the Kentucky Public Service Commission shows that the effective increases would be significantly higher.

That’s because the utility is also dropping credits customers have been getting on their bills since April to reflect LG&E’s savings under the Republican-led federal tax plan.

When the removal of those credits is factored in, the typical customer is looking at a $7.53 monthly increase, or 7.5 percent, for electric service; and a $7.14 increase, or 12.2 percent, for gas service, LG&E says in documents filed with the commission in September.

The credits are LG&E’s way of sharing its newfound tax savings with customers.

The Tax Cuts and Jobs Act, championed by Congressional Republicans and signed by President Trump last year, cut the U.S. corporate income tax rate to 21 percent, from 35 percent. The tax cut saves LG&E, a subsidiary of PPL Corp., a publicly traded company based in Pennsylvania, about $85 million a year.

In March, the Public Service Commission ordered LG&E to put the credits on customer bills through April 30, 2019, when the utility indicated it would ask for higher service rates to go into effect.

The credits are typically worth a few dollars a month. For example, this reporter received $4.44 in credits on his family’s October bill, which was $108 in total.

LG&E’s press release announcing the proposed rate increases in September didn’t use the higher figures that take into the account the removal of the credits.

But the company said the benefits of tax cuts "will be reflected in the companies' base rates, rather than as a line item on customer bills.”

Natasha Collins, LG&E’s director of media relations, said in an email Tuesday that the company’s current request to the Public Service Commission deals only with the rates for electric and gas service, while the credits for the tax savings were already scheduled to end in April without any further action from the commission.

“While the benefits of the Tax Cuts and Jobs Act are fully included in the forecasted test year used to establish base rates, only bill impacts associated with the base rate changes are quoted, not those associated with any individual mechanism,” Collins said.

LG&E is asking for the rate increases to take effect by May 2019.

The commission, a three-person board appointed by Gov. Matt Bevin, has the power to set rates. It typically allows utilities to raise their prices by smaller amounts than they first propose.

LG&E last raised rates in the spring of 2017.