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LG&E Utilities Implementing PBR

LG&E Utilities Implementing PBR

LG&E Energy Corp. utility subsidiaries Louisville Gas and Electric and Kentucky Utilities received orders from the Kentucky Public Service Commission (PSC) implementing performance-based ratemaking (PBR) effective July 2.

As part of an amended LG&E PBR filing, LG&E also agreed to refrain from filing for an increase in gas rates through June 30, 2004. The amendment requested PSC approval of a five-year bill reduction plan, which would reduce electric costs by $20 million in the first year (beginning July 1), and by $8 million annually for each of the next four years through June 30, 2004, for a total five-year savings to customers of $52 million. The reductions will be distributed 47% to LG&E and 53% to KU customers.

The commission is expected to issue a final PBR ruling later this summer. The amended PBR filing calls for LG&E and KU to extend for an additional year (through June 30, 2004) both the rate cap and the merger-savings credit the utilities established as part of their earlier merger plan. Under the rate cap, the companies agreed, in the absence of extraordinary circumstances, not to adjust base electric rates for five years following the merger. They also agreed to a monthly credit to customer bills reflecting the 50% share of the non-fuel merger savings allocated to customers in the first five years following the merger.

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