Utility Companies Tell Lawmakers Environmental Upgrades Will Raise Rates

by Erica Peterson on June 2, 2011

Several utility companies across Kentucky told a legislative committee ratepayers should expect a 20 percent increase over the next five years, largely due to environmental upgrades.

According to KPR’s Tony McVeigh:

“Representatives of several coal-fired utilities in Kentucky say meeting federal clean air standards already in the pipeline will require investments of billions of dollars.  John Voyles of LG&E and KU says their capital costs could rise by four billion dollars over the next ten years.

‘This does not deal with the water rules.  It does not deal with renewable portfolio standards of any kind.  And it certainly does not deal with any climate change rules that might still be legislated in the future.'”

LG&E announced last week that it would be seeking cost recovery for $2.5 billion in upgrades for its coal-fired power plants. Besides LG&E, Big Rivers Electric Corporation, Eastern Kentucky Power Cooperative and Duke Energy have planned rate increases.

The increases are ultimately up to the Public Service Commission. According to The Lexington Herald-Leader, at least one state senator is questioning why rates continue to go up, even in coal-producing areas.

“But Sen. Ray Jones, D-Pikeville, questioned why the statutes allow the companies to recover both capital and operating costs from customers for changes made to comply with regulations. That means they can still make a profit and pass all of the costs to the customers.

‘That doesn’t sit right with me,’ Jones said. In the past, Jones and other Eastern Kentucky legislators have questioned why power rates in Eastern Kentucky have sky-rocketed over the past several years, while power companies continue to make healthy profits.”

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