Louisville Gas and Electric, Kentucky Utilities ask for rate changes

Allentown, Pa., June 8, 2012 — Louisville Gas and Electric Co. plans to file a request with the Kentucky Public Service Commission later this month to increase base electric rates by $62.1 million, primarily to recover costs associated with improving service and reliability. The company is also requesting a $17.2 million base natural gas rate increase.

LG&E and its sister utility, Kentucky Utilities Co., have invested more than $1 billion over the last 29 months to meet energy demands and improve service and reliability. More than 4,000 generation, transmission and electric and gas distribution projects have occurred during that time.

Kentucky Utilities Co. also plans to file a request with the Kentucky Public Service Commission later this month to increase base electric rates by $82.4 million, primarily to recover costs associated with improving service and reliability.

Some of the largest investments were to meet customers' continued growing energy needs and enhance reliability — the new 585-MW unit at the Trimble County 2 Generating Station, one of the cleanest coal-fired units in the country, upgrades to the distribution and transmission systems and upgrades at Ohio Falls, the hydroelectric plant on the Ohio River. LG&E also made considerable investments in its natural gas business as part of its continued 615-mile natural gas main replacement project and increased leak surveying.

In addition, LG&E is requesting a Certificate of Public Convenience and Necessity for a proposed five-year natural gas line program, similar to what many other gas utilities around the country have done, to relieve customers from the responsibility of maintaining the part of the gas infrastructure called the "riser" — the pipe from the ground to the meter — and allow LG&E to make necessary repairs on it.

As part of the program, LG&E would proactively replace certain gas risers and take ownership of the natural gas line segment that runs from the customer property line to the LG&E gas meter. The costs associated with this program and the continuation of the gas main replacement project would be recovered under a new rate mechanism called a "gas line tracker," which would appear as a separate line item on LG&E natural gas customers' bills.

The utilities have taken significant steps to improve service by creating nearly 175 new jobs since the last rate case. Many of the positions are located in Morganfield at LG&E's and KU's new customer care center, where about 50 employees were hired.

The utilities also have created a number of jobs to help meet tighter federal cyber security standards as well as more stringent transmission reliability requirements. LG&E and KU were honored last year for superior commitment to reliability performance by SERC Reliability Corporation, the nonprofit organization responsible for promoting and improving system reliability.

For a residential LG&E electric customer using 1,000 kWh per month, this will mean an increase of about $7.21 per month, or less than 25 cents per day. For a natural gas customer using 60 Ccf per month, the base rate increase will be about $3.44 per month, or 11 cents per day. The initial cost associated with the gas line tracker would be about $2.35 per month beginning 2013.

LG&E will file for the increase on June 29 and, if approved, the increases will not occur until January 2013.

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