Company seeks to recover costs associated with gas-combined generation unit
LOUISVILLE, Ky. (Nov. 4, 2014) — In order to recover costs associated with Kentucky’s first natural gas-combined generation unit and the creation of infrastructure jobs to improve reliability, Kentucky Utilities Company will submit a request for a 9.6 percent revenue increase of $153 million.
If approved, the average cost per kilowatt hour for customers will be raised from 8.99 cents to 10.50 cents. For a residential customer using an average of 1,200 kWh, the increase is expected to be approximately $11 per month, or 37 cents per day.
“We understand the financial impact these increases have on our customers,” said Victor A. Staffieri, chairman, CEO and president of LG&E and KU Energy. “We’ve worked hard to minimize the consequences of federal environmental mandates. We continue to demonstrate fiscal restraint to ensure our customers continue to receive some of the lowest cost, most reliable energy in the country.”
If approved by the Kentucky Public Service Commission, the rate adjustments will take effect in July 2015.
Due to environmental mandates issued by the U.S. Environmental Protection Agency in 2011, KU and its sister company Louisville Gas and Electric Company retired 13 percent, or 800 megawatts, of their older coal-fired generation.
While KU still depends on coal for much of its current generation, the stricter environmental regulations made building new coal-fired generation uneconomical to pursue. After years of studying extensive supply options, KU and LG&E received approval to build a 640-megawatt natural gas combined-cycle unit, which was the least expensive solution. The new unit, which is being constructed at an existing facility, will provide energy with less emissions and help cover the loss of generation from the coal units’ retirement.
KU serves approximately 543,000 customers in 77 Kentucky counties and five counties in Virginia. To meet their energy needs, KU will own 78 percent of the new $563 million unit that is scheduled to be commercially operational in May.
“We continue to work diligently to maintain high-quality and efficient service at some of the lowest rates in the nation,” Staffieri said. “We use prudent financial measures to achieve savings that benefit our customers, and don’t go before the Kentucky Public Service Commission with requests to recover our costs unless it’s absolutely necessary. The investments we’re seeking to recover in this rate case represent our commitment to prudently plan for Kentucky’s energy future while continuing to keep rates among the lowest in the nation.”
In addition to building Cane Run, KU also is making investments in its transmission and distribution systems to maintain its reliability, including circuit hardening and a proactive hazardous tree removal program.
KU also is using technological enhancements to improve response times when crews are working in the field and restoring customers’ power. Today, most KU field employees receive work orders directly from an outage management system through specialized laptops installed in their trucks.