Louisville Gas and Electric Company and Kentucky Utilities Company Reach Agreement with Key Stakeholders on Rate Requests

Louisville Gas and Electric Company and Kentucky Utilities Company have reached an agreement with the majority of the intervening parties to their requests to adjust base rates supporting ongoing system enhancements and hardening projects to defend against the impacts of more frequent and severe storms, implement new technologies, meet increased energy needs and improve customers' service.

The agreement was filed with the Kentucky Public Service Commission (KPSC) for approval. LG&E and KU filed their requests on May 30 with the KPSC for adjustments to their total revenues. New rates are expected to be effective after January 1, 2026.

"Kentucky has a very open and transparent regulatory process that allows for customer input and representation, and this process enables thoughtful discussion and extensive reviews among the parties involved," said John R. Crockett III, LG&E and KU President. "This agreement would allow us to continue making necessary system enhancements, upgrade aging equipment and enhance service for our customers."

The utilities are using a data-driven strategy and revised system design criteria to deal with more ice accumulation and up to 100 mile-per-hour wind gusts. They are installing stronger wires and poles for system hardening; replacing wooden poles on the transmission system for steel poles; and investing in real-time monitoring and automated technologies. Thus, the frequency of power outages has reduced by 40% and the duration of time customers are without power has reduced by 30%.

Currently, 55% of the utilities' wooden transmission poles are more than 60 years old and are required to be replaced with steel structures. Equipment upgrades are necessary in the utilities' aging substations, some of which are nearly 100 years old.

The utilities are making significant technology improvements, including new advanced meter technology and upgrading information technology systems to improve customer billing and add more protection against cyber-related threats.

LG&E and KU have proposed new services to help reduce the impact for customers and allow for more flexibility. They have asked for approval to waive the current $1.95 transaction fee required for cash payments at third-party locations, and to help customers better manage their energy usage and budget, they are requesting a pre-pay program for residential customers with advanced meters.

The utilities also proposed a new rate called Extremely High Load Factor Service. It applies to customers requiring the largest amount of power and who use it at a steady, high level.

The customers are expected to sign a 15-year contract and commit to paying for at least 80% of the power they reserve. This ensures large users with unique energy needs are paying for their fair share of the utility system and rates that reflect the scale and consistency of their energy use, without shifting costs to other customers.

Under the agreement, LG&E will receive a $58 million increase for electric service and $45 million increase for natural gas service. KU is anticipated to receive a $132 million increase for electric service.

Based on customers' average usage, KU residential electric customers will see an increase of $9 in their total monthly bill. LG&E residential electric customers will see an increase of $5.04 and residential gas customers will see an increase of $8.10 in their total monthly bill.

The current requests are below the rate of inflation, which increased nearly 20% over the last five years. Residential electric rates will remain more than 24% below the national average.

Under the agreement, LG&E and KU commit to not increase base rates again until at least August 1, 2028. The agreement also includes a new mechanism, the Generation Cost Recovery Adjustment Clause, which provides the recovery of costs and a return on investments associated with new generation, as well as a Sharing Mechanism Adjustment Clause, effective during the last 13 months of the stay-out period.

Any revenue deficiency or surplus tracked through the mechanism during the time will be collected from or returned to customers over a thirteen-month period beginning November 2028. Parties to the case not joining the agreement will have the same opportunities as normal to continue participating in the regulatory process.