LG&E
Press Release
220 West Main Street
Louisville, KY 40232
Media Contact: Chip Keeling
24-Hour Media Hotline: 502.627.4999 Toll-free: 888.627.4999
LG&E Seeks First Base Electric Rate Increase In 13 Years
(LOUISVILLE, Ky. - Nov. 25, 2003) Louisville Gas and
Electric Company announced today it intends to pursue increases
in its base electric rates for the first time in more than a
decade. Although the company has only preliminary numbers, LG&E
is expected to seek a 12 percent increase in its electric rates,
for approximately $67 million per year. The company will also
seek a 6 percent increase in its gas rates, for about $20 million
per year. LG&E last sought a base electric rate increase in 1990.
LG&E lowered its rates in 2000 by more than $26 million. As a
result, today's electric rates are lower than they were in 1990.
A representative residential LG&E electric customer, using
1,000 kwh, is expected to see an increase of about $7 per month,
while a representative residential LG&E gas customer, using 90
ccf, is expected to see an increase of about $6.
The amount of the increase LG&E will seek will be based on a
test year which ended in September. Final details will be
available by year end.
The increase in rates is caused, in large part, by the need
to meet growing demand, particularly from new business. In the
last decade, customers have increased by 62,285, or 20 percent,
while their actual bills have decreased about $3 per month, or 4
percent.
"When you look at the rate of inflation and the economic
situation we are in today, our electric rates are actually lower
today than they were when we last requested increases," said Vic
Staffieri, LG&E's and LG&E Energy's Chairman, CEO and President.
Even with the proposed increase, the company's electric
rates will remain lower than those of the seven states bordering
Kentucky, and the company will still have some of the lowest
rates in the nation. The gas and electric increases are
necessary because LG&E's costs of doing business, including
safely and reliably delivering service, have increased
dramatically over the past decade.
During the last three years alone, LG&E has made $33 million
in capital investments to meet the needs of new gas customers
coming onto the system and to replace aging gas mains. LG&E and
its sister company, Kentucky Utilities Company, have spent $285
million in the last three years, adding new generating capacity,
and are expected to install additional capacity over the next two
years to meet electric demand growth. The companies have invested
roughly $18 million per year in their transmission system.
Significant increases have also occurred in administrative and
general expenses - in particular pension, post retirement, health
care, and insurance expenses. For example, the companies have
encountered an approximately 140 percent increase in property
insurance since the terrorist attacks of September 11, 2001.
"We're proud that - despite a lot of turmoil in our industry
- -- our employees have been able to hold electric rates steady for
more than a decade through their hard work, efficiencies and
ingenuity," said Staffieri. "But there comes a time when you must
react to the economic situation you face, regardless of your best
efforts.
"Obviously, decisions such as this don't come easily to us,
as evidenced by the fact that we haven't filed for an increase in
some time," he added. "However, we're at a point now where
additional resources are necessary in order for us to continue to
provide the quality service our customers have come to expect."
KU also is requesting an increase. The utilities will file
the increases in late December. The Kentucky Public Service
Commission has traditionally suspended the implementation of the
rates for five months in order to hold public hearings. A
decision likely will not be reached until next summer.
LG&E is a wholly owned subsidiary of LG&E Energy Corp. that
serves 310,000 natural gas and 382,000 electric customers in
Louisville, Ky., and 16 surrounding counties.
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