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Regulators grant $203.8M revenue reduction to PPL's Kentucky utilities

The Kentucky Public Service Commission on March 19 issued an order granting Kentucky Utilities Co. and Louisville Gas and Electric Co. a total annual revenue decrease of $203.8 million to reflect the savings from the recent tax reform law.

As a result, residential electric customers of the two PPL Corp. subsidiaries may expect a monthly average decrease of about 6% in their bills, while gas customers of Louisville Gas and Electric, or LG&E, may expect to see a monthly average reduction of about 4.5% in the base portion of their bills.

The commission modified a January 2018 settlement between the utilities, Kentucky Industrial Utility Customers Inc. and the Kentucky Office of Attorney General. The settlement originally proposed a total revenue decrease of $176.9 million, but the rate reduction approved by the commission is $26.9 million higher because of calculation changes to the impact of the tax reform.

The revenue reduction will be reflected in the Tax Cut and Jobs Act Surcredit that will appear on Kentucky Utilities and LG&E customer bills, effective April 1, 2018, to April 30, 2019. It will reflect ongoing tax savings and an additional credit for the first quarter.

Kentucky Utilities and LG&E also plan to file a rate case to reflect changes in the federal corporate income tax rate, with new proposed rates expected to take effect May 1, 2019. If utility rates are unchanged at that time, the surcredit would remain but be recalculated.

The tax changes will also slightly reduce surcharges that include a capital cost component. They include environmental surcharges and demand-side management surcharges for Kentucky Utilities and LG&E electric customers and a gas line replacement surcharge assessed to LG&E natural gas customers.

(Kentucky PSC Case No. 2018-00034)