Exhibit 99.01
LG&E, KU Reach Agreement With Kentucky Attorney General,
File Amendment to PBR Proposal
LOUISVILLE, Ky., April 5 -- LG&E Energy Corp.'s (NYSE: LGE) two utility
subsidiaries, Louisville Gas and Electric Company and Kentucky Utilities
Company, and the Kentucky Attorney General's Office, today filed with the
Kentucky Public Service Commission (PSC) a joint agreement for regulation
of the utilities through June 30, 2004. The agreement results in an
amendment to the utilities' pending performance-based ratemaking
(PBR)proposal.
The amendment to the utilities' PBR application requests PSC approval of a
five-year rate reduction plan, which would reduce electric rates by $20
million in the first year (beginning July 1, 1999), 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 between LG&E and KU customers based on the same methodology
the PSC approved in its previous merger order for allocating the merger
savings to the utilities' customers (53 percent to KU customers; 47 percent
to LG&E customers). The joint agreement includes adoption of the PBR
program as proposed by the companies.
"The joint regulation plan is the result of painstaking negotiations with
the Attorney General's office in recent weeks," said Xxxxxx X. Xxxxxxxxx,
LG&E Energy's chief operating officer. "We are optimistic that this
agreement will move us closer to final resolution of this issue and to
eliminating the regulatory uncertainty for our shareholders. The agreement
also offers tremendous value to our customers by providing significant
immediate savings as well as long-term rate stability."
Kentucky's electric rates are already the third lowest in the nation, 38
percent below the national average, even without the additional LG&E and KU
rate reductions.
The proposal also includes the establishment of a $6 million program over
the five-year period to assist low-income customers in paying their energy
bills. This program, which will be administered by third parties, will
receive $2 million in the first year and $1 million annually for the
remaining four years.
In addition to the rate reductions and energy assistance program, the
proposal calls for LG&E and KU to extend for an additional year (through
June 30, 2004) both the rate cap and the merger-savings surcredit 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 surcredit to customers' bills reflecting the
50 percent share of the non-fuel merger savings allocated to the utilities'
customers in the first five years following the merger.
As part of the amended PBR filing, LG&E also agreed to refrain from filing
for an increase in natural gas rates over the five-year period (through
June 30, 2004).
In addition to the savings offered by the utilities' proposal, customers
will also share in performance incentives that are part of the pending PBR
filing. The PBR provides incentives to the utilities to achieve
performance targets established for power plant operations, fuel purchasing
and service quality.
LG&E Energy Corp., headquartered in Louisville, Ky., is a diversified
energy services company with businesses in power generation and project
development, retail gas and electric utility services, and asset-based
energy marketing. The company owns and operates Louisville Gas and
Electric Company, a regulated electric and gas utility and Kentucky
Utilities Company, a regulated electric utility, based in Lexington, Ky.,
which serves 77 Kentucky counties and five counties in Virginia. LG&E
Energy also owns equity in and operates power plants in six states as well
as in Spain, and owns interests in three natural gas distribution companies
in Argentina.
