Public Service Commission
PSC to Hear Legal Issues on LG&E/KU Wind Power Proposal - Proceeding will consider basis for earlier denial of surcharge

       The Kentucky Public Service Commission (PSC) will conduct oral arguments on the question of whether the Commission ruled correctly when it denied a procedural request by Louisville Gas & Electric Co. (LG&E) and Kentucky Utilities Co. (KU) to establish a surcharge to recover the cost of purchasing wind energy.
        The two utilities, the Kentucky Office of Attorney General (AG) and the Kentucky Industrial Utility Customers, Inc. (KIUC) all have asked the PSC to reconsider its Oct. 21 ruling.
        LG&E and KU say the PSC interpreted a Kentucky Court of Appeals decision too narrowly with respect to the PSC’s authority to allow surcharges. The AG and KIUC contend the PSC took an overly broad view of the decision’s impact on the PSC’s surcharge-granting authority.
        A review of the Court of Appeals decision is pending before the Kentucky Supreme Court.
        Given the issues raised in the requests for rehearing, the PSC will conduct oral arguments in the case on Wednesday, Dec. 16, at 10 a.m. EST at the PSC offices, 211 Sower Boulevard in Frankfort. The proceeding is open to the public.
        In a Nov. 25 order setting the oral arguments, the PSC reaffirmed its earlier decision to review LG&E and KU’s proposed wind energy contracts.
        LG&E and KU have proposed to purchase power from two Illinois wind farms with a combined capacity of about 110 megawatts. The utilities say the wind power purchases would help them meet any future requirement that a portion of their energy generation come from renewable sources.
        In its Oct. 21 order, the PSC ruled that the wind energy costs should be considered only within the framework of a general rate case that examines a utility’s overall expenses and revenue. An examination of the contracts can proceed independently, the PSC said.
        PSC Chairman David Armstrong said in October that the PSC denied the surcharge request simply to ensure “that the rate impacts of this proposal are considered appropriately.” The earlier decision was “purely procedural and (made) no judgment about the wind energy proposal itself.”
        LG&E and KU are both subsidiaries of E.ON US. LG&E has about 401,000 electric customers in nine counties in and around the Louisville area and 308,000 natural gas customers in 21 counties. KU has 504,000 customers in 77 Kentucky counties.
        The orders and other documents in the case are available on the PSC Web site, psc.ky.gov. The case number is 2009-00353.
        The PSC is an independent agency attached for administrative purposes to the Energy and Environment Cabinet. It regulates more than 1,500 gas, water, sewer, electric and telecommunication utilities operating in Kentucky and has approximately 100 employees.