FRANKFORT — Attorney General Jack Conway is asking the state Public Service Commission to dismiss rate increase requests from Kentucky Utilities and Louisville Gas and Electric because they are being sold.
“If these utilities are being sold, the new company that will be collecting these bills and reaping the benefits of the rate increases should have to make its case to the PSC – not a company that has a ‘For Sale’ sign in the yard,” Conway said Wednesday at a news conference in his Capitol office.
KU and LG&E have requested from the state Public Service Commission a $250 million increase, effective July 31. Conway said the request would represent the largest combined rate increase in Kentucky history.
Kentucky’s largest providers of electricity and natural gas are seeking the increases to recoup investments in a power plant in Trimble County and significant costs incurred by ice and wind storms.
For KU, the increase would raise electric rates by 11.5 percent, or $136 million, overall. The utility provides power to more than 500,000 homes, farms and businesses in Fayette County and 76 other counties in Kentucky and five in Virginia.
The utility would raise residential rates 13.7 percent. The average residential customer, seen as one using 1,230 kilowatt hours a month, would see bills rise $11.85 a month.
Conway, who serves as the ratepayers’ advocate in utility rate cases, said the requests by KU and LG&E are inflated.
The PSC, which rules on rate increase requests from utilities, is to hold a hearing on the LG&E and KU rate requests June 8.
On May 27, E.ON U.S., the parent company of LG&E and KU, filed notice with the state that it intended to sell the utilities to Pennsylvania Power and Light.
The PSC must approve the sale. It has 120 calendar days from the date of the filing to rule on any change of control.
Conway said the state never has considered a utility rate increase at the same time a company is requesting a change of control.
“I am concerned that E.ON, by requesting these rate increases, is trying to raise its credit profile, reduce its debt and overall make it a more attractive company to Wall Street and buyers,” Conway said.
“This kind of thing makes consumers irate. It’s just not right.”
E.ON U.S. spokesman Brian Phillips said E.ON plans to respond to the state Public Service Commission by Friday.
“Merger and the request to increase electric and natural gas base rates are two separate and distinct processes that are completely unrelated,” he said. “Regardless of who our parent is, we must continue to invest to serve our customers, and that’s what a rate case allows us to do.”
Phillips said E.ON is investing in the Trimble County power plant “to serve increasing electric demand.
“We continue to invest to enhance reliability on our natural gas and electric operations, and we’ve invested to restore service after two historic weather events.”
Conway is the Democratic nominee for U.S. Senate in this fall’s general election against Republican Rand Paul.
Conway said his action in the rate case has nothing to do with his U.S. Senate race. He said he will not take campaign contributions from utility executives and lobbyists while they have any case before the PSC, although he has previously accepted donations from people associated with KU and LG&E.
During this spring’s Democratic primary election for the U.S. Senate, Lt. Gov. Daniel Mongiardo alleged that campaign contributions by utility interests influenced rate hike approvals by Conway.
The Mongiardo campaign estimated that Conway’s campaign took in nearly $60,000 in campaign cash from utility executives and lobbyists last year, while approving a $22 million gas rate hike for LG&E.
Documents in the attorney general’s office show that Conway negotiated the rate increase on Jan. 7, 2009.
He announced his bid for U.S. Senate a few months later on April 9.
Mongiardo said Wednesday he did not see any need to return the contributions.