Office of the Attorney General
Attorney General Conway Files Motion to Dismiss LG&E and KU Rate Increase Cases

Attorney General Jack Conway today filed a motion to dismiss the pending Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) rate increase cases because the utilities are being sold.

"This is the largest combined rate increase request in Kentucky history," General Conway said. "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."

LG&E and KU have requested a total of almost $250 million dollars in rate increases from the Public Service Commission (PSC) that would go into effect on July 31, 2010. The utilities are requesting the rate increases because their executives say they need to recoup investments in the Trimble County power plant and significant costs incurred by the ice storms and windstorms in Kentucky. LG&E and KU are Kentucky's largest providers of natural gas and electricity.

The Office of the Attorney General intervened in the rate increase cases on behalf of consumers because it felt the requests were inflated. A hearing on the rate case is scheduled for June 8 at the PSC. The PSC rules on rate increase requests from the utility companies.

On Friday, May 27, E.ON U.S., the parent company of LG&E and KU, filed notice with the PSC that it intended to sell the utilities to Pennsylvania Power and Light (PPL). The PSC must approve the merger or any sale of a utility that is based in Kentucky. It has 120 calendar days from the time of the filing to rule on the change of control.

General Conway felt it was inappropriate for the change of control and rate increase cases to proceed simultaneously.

"We have never had a utility file for a rate increase at the time it is requesting a change of control," General Conway said. "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 to buyers. This kind of thing makes consumers irate. It's just not right."

Attorney General Conway and his Office of Rate Intervention argue in their dismissal motion that rate increase cases are based on a company's history and data gathered during a test period to determine the normal and ongoing operations of the utility. The PSC would essentially be determining rates for consumers based on data from an entity that no longer owns or will have anything to do with the future operation of these utilities.

The PSC will determine whether or not to grant General Conway's request for dismissal.