PSC Approves Reduced Rate Increases for LG&E and KU

Louisville — The Kentucky Public Service Commission approved smaller-than-requested rate increases for Kentucky Utilities (KU) and Louisville Gas and Electric (LG&E), stating the additional revenue will help fund infrastructure upgrades and offset rising costs from severe weather.

What You Need To Know

• The Public Service Commission approved rate hikes for KU and LG&E.
• The average KU electric customer will see a monthly increase of $8.73.
• The average LG&E electric customer will see a monthly increase of $5.14.
• Average LG&E gas customers will see a monthly increase of $8.27.

In a final order issued Monday, the PSC approved a 6.54% increase for the average residential KU electric customer who uses about 1,085 kilowatt-hours per month. That change adds roughly $8.73 to a typical monthly bill, raising it from $133.57 to $142.30. KU had originally requested an 11.5% increase, marking its first rate request since 2020.

For LG&E electric customers, the PSC approved a 4.73% increase, adding about $5.14 per month and raising the average bill from $108.76 to $113.90. The commission also approved an 11.09% increase in LG&E’s natural gas rates for the average residential customer, which raises the typical monthly bill by about $8.27 — from $74.59 to $82.86. LG&E had requested an 8.3% electric rate increase and a 14% gas rate increase.

The commission modified a settlement agreement reached by KU, LG&E, and several intervening parties. The settlement had proposed increases of 6.74% for KU, 4.63% for LG&E electric, and 10.86% for LG&E gas, along with a commitment not to file another rate case until 2028. However, the PSC rejected a proposed “Sharing Mechanism” that would have allowed automatic rate adjustments between July 2027 and July 2028 to keep utility returns within a designated range. Regulators cited concerns about limited oversight and the potential for significant rate fluctuations.

The PSC also revised a proposed Generation Cost Rider and approved updates to several tariffs.

Initial applications would have increased monthly bills by $18.14 for a typical KU customer, $11.04 for a typical LG&E electric customer, and $11.12 for a typical LG&E natural gas customer. While the commission reduced those projected increases, actual customer impacts will vary based on usage.

LG&E and KU together serve more than 1.3 million customers. LG&E provides electric service to 436,000 customers and natural gas service to 335,000 customers in Louisville and 16 surrounding counties. KU serves 545,000 customers across 77 Kentucky counties and 28,000 customers in five Virginia counties.