LG&E Outlines Potential Rate Increases to Metro Council

by Erica Peterson on August 11, 2011

Electricity rates will be going up, but no one yet is sure exactly how much. Power company officials testified before a Metro Council committee today about the effect environmental regulations will have on ratepayers.

There are a host of federal air regulations that have been issued this year or are expected soon. Combined with a rule from the Environmental Protection Agency governing the handling of coal ash, compliance will cost Louisville Gas & Electric, and by extension, their ratepayers.

LG&E filed for a 19 percent increase over the next four years with the Kentucky Public Service Commission in June. But this increase just covers environmental upgrades at Mill Creek and Trimble County power plants.

As far as the plant at Cane Run, or Kentucky Utility’s plants at Green River or Tyrone are concerned, they could add more to the cost. LG&E’s John Voyles says the company sent out requests for proposal to weigh its options for replacing those units.

“We’re comparing our build costs to buying power to buying already-built plants and trying to assemble the least cost way to replace that energy,” he said.

Voyles told committee members that LG&E has a double mandate: to generate electricity, and to provide it as cheaply as possible. Councilman Brent Ackerson raised concerns that switching to natural gas may hurt Kentucky’s economy.

“My concern is, when we sit here and we talk today about natural gas and shipping it in from out of state, my concern is when you balance the two mandates, is there a collateral mandate in there that essentially we think about Kentucky’s future?” Ackerson asked.

He was told the decision is ultimately up to the PSC, but very few coal fired power plants have been permitted recently.

Depending on LG&E’s course of action, ratepayers could see their electricity bills increase by an additional five percent.

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