Superintendents:
The Kentucky Public Service Commission on April 30 issued an order approving a rate increase for Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), however the increase is much smaller than the utilities had requested.
The order, which was the result of a settlement, is estimated to save KU served districts approximately $600,000 per year from the requested increase and save LG&E served districts approximately $300,000 per year.
Here is a rundown of the proceedings.
In late 2018, KSBA intervened in the rate cases (LG&E Case No. 2018-00295 and KU Case No. 2018-00294) on behalf of Kentucky school districts. Other interveners included the Kentucky Attorney General, both Louisville and Lexington governments and eight other entities.
In their initial request, LG&E sought an electric rate increase of $74.9 million, a 6.8 percent increase, and a gas rate increase of $30.75 million, a 9.1 percent increase. KU sought an increase of $170.9 million, an 11 percent increase.
The settlement reduced those increases with LG&E receiving a 3.7 percent increase for electric and a 7.2 increase for gas. KU received a 7.4 percent increase.
In addition to the settlement, KSBA was able to negotiate a rate design concession designed to help schools and districts. KU and LG&E agreed to shift a portion of the costs from the demand (kW) charge to the energy (kWh) charge. By “tilting” the cost increase to the energy cost from demand cost it will help low energy load rate payers such as schools and districts.
However, the settlement also applied credits created by the 2018 Federal Job Credit Tax Act to schools’ demand charges instead of the energy charges, meaning schools will receive a greater benefit going forward from the tax reduction act.
These two rate design concessions are estimated to save districts an estimated $100,000 annually for each utility. Finally, schools will also continue to benefit significantly from accounts that are grandfathered in at lower cost rates.
While preparing for this case, KSBA identified certain school accounts on incorrect utility rates and advised affected districts of these potential changes. Moving to the correct rates is estimated to save approximately $200,000 per year on an ongoing basis.
In addition, the demand charge on Rate TODS, a rate typically paid by middle schools and high schools, is being changed from a per kW to per kVA (kilo-volt-ampere) basis. This will benefit many school accounts with no change in operation. Other TODS accounts may need to install power factor equipment to gain the benefit and certain Rate PS accounts, typically schools using between 50 and 250 kW, should consider switching to Rate TODS (loads greater than 250 kW) in order to make sure they are paying the lowest rate available.
You should contact your local LGE/KU representative for assistance in reviewing appropriate rate application for each of your accounts.
This resolution of these cases and the other concessions has the potential for long-lasting financial benefit for KSBA member schools along with the potential to increase the “tilt” further in additional rate increase cases, potentially benefiting more schools.
The new rates for all KU and LG&E ratepayers took effect May 1, 2019.
Thank you for your attention to the foregoing,
Kentucky School Boards Association
