A rate case settlement agreement between Duke Energy Kentucky and the commonwealth’s attorney general would increase rates for natural gas delivery service by approximately $13 million, or 10.4% of total gas revenues, effective in early 2010. The original request was for $17.5 million, or a 14% increase, the company said Monday.

The agreement requires the approval of the Kentucky Public Service Commission.

For an average residential customer using 70 Ccf/month (1 Ccf is 100 cubic feet), a typical bill of $82.21 would increase by $11.52 per month to $93.73.

Since its last delivery rate case implemented in 2006, Duke Energy Kentucky has invested more than $60 million to continue an accelerated gas main replacement program (AMRP). The rate change would allow the company to begin to recover its costs for this investment.

The 10-year AMRP program began in 2000 with the goal of replacing 209 miles of high-maintenance cast iron and bare steel gas mains and services with low-maintenance polyethylene pipe. Benefits of the AMRP include increased safety and system reliability, higher system operating pressure, lower line losses and stable operation and maintenance expenses, the company said. The program is 82% complete and scheduled for completion in 2010.

One key safety metric of the AMRP’s success is the reduced leak rate for the distribution system. The number of leaks repaired annually has decreased 29% from 2002 to 2008, and severity of leaks reported has been reduced. From 2006 to 2008 main repairs have been reduced by 41%, the company said. The reduction in leaks repaired is estimated to have saved customers approximately $3.8 million from 2001 to 2008.

“In the four-plus years since the last rate case, the company’s operating and maintenance expenses have remained basically flat, but Duke’s investment in infrastructure has left the company well short of recovering its costs of providing service to Kentucky customers,” said Julie Janson, president of Duke Energy Kentucky.

The residential customer charge would increase from the current $12 per month to $16 per month to partially cover fixed expenses incurred to deliver gas to residential customers, the company said.

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