Finally. Somebody is telling the power companies and the PSC they don’t want to play let’s make a deal.
 Attorney General Jack Conway and his small band of doughty legal eagles in the public service branch of his office refused to agree to settle the KU and LG & E rate increase cases this week. This decision came despite the agreement of the other intervenors (the US Army, AARP, representatives of low income consumers and large corporate customers, like Wal-Mart) to the settlement. All parties, including the AG, (most likely not Conway in person, but the attorneys in his office handling this massive case) met with PSC staff on June 2nd and 3rd. The other intervenors went back to the table and worked a deal on June 7th. A synopsis of the proposed deal that is in stipulation by Lonnie Bellar, VP for state regulations for KU and LG & E is at the end of this article.
Conway’s team instead filed a 42 page motion on June 2, 2010, asking the Public Service Commission to dismiss the rate increase request because the two companies are for sale. E-ON, KU and LG & E’s parent company has a request pending before the PSC to sell the companies to PPL Corporation. The AG’s argument that the change in ownership will change KU and LG & E’s economic condition. The AG argued the numbers used to justify the rate increase will no longer be an accurate predictor of the new company’s operating condition.
The PSC denied the motion, siding with the companies that the AG was citing documents related to PPL, not LG & E and KU. The PSC also said there is historical precedent for allowing a rate increase while an electric company sale is pending. The PSC will allow the AG to pursue a line of inquiry into the shape, size and financial structure of the two companies.
Attorney General Jack Conway’s office issued the following statement :
“We are disappointed in the Public Service Commission’s decision today not to grant our motion to dismiss the LG&E and KU rate increase cases due to the pending sale of their parent company, E.ON. However, we are pleased that the Commission has provided us the opportunity to further develop the issues we are concerned about during the course of the hearing and renew our request for dismissal at a later point in the proceedings. We will continue our vigorous representation of Kentucky ratepayers throughout this hearing.”
The two companies filed a joint stipulation of the agreement reached by everyone but the AG. In essence, residential KU customers would see base rates go up 13.54% for the base rate. The “customer charge” which is currently $5 a month will go to $8.50 – not the $15 requested by the company. There will be some adjustments in the timing of bills, allowing customers more time to remit payment. Both will increase their contribution to Wintercare, the low income heating assistance programs. Losses from the 2009 Ice Storm will be amortized over ten years. For a complete history of documents filed in the KU case go to
How high are the stakes? Do the math. KU serves 506,000 customers in 77 counties across Kentucky. LG & E serves 401,000 electric customers in nine counties around Jefferson and 312,000 gas customers in seventeen counties. A $10 increase in KU’s customer charge that was requested would have generated $5,060,000 additional income monthly for KU. Even the modest $3.50 increase in the customer charge will add $1,771,000 monthly to the bottom line. That's before the rates increase.
AG Conway and his team represent 1.2 million clients in this case. In a down economy when so many still face losing their jobs and their homes, an increase in utility rates may be the push that send them over the financial cliff.
The Attorney General has a chance to stand up for his clients in a big way in this case. This client doesn’t want to settle for “only” a 13.54% increase. This customer can only hope that AG Conway realizes that middle and lower income families can't afford to contribute more to the bottom line of these always up for sale power companies. Fight them through the hearing, then take them to Franklin Circuit Court. Win or lose. We will know the AG cared enough to put it on the line for us.
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