Rate intervention

Rate intervention

Double play: PSC reduces impact of utility rate hike on schools, paves way for special tariffs
Kentucky School Advocate
July/August 2017
By Madelynn Coldiron
Staff writer

The utility bills of public schools served by Louisville Gas & Electric and Kentucky Utilities will not take as large a hit as originally projected, thanks to KSBA and other groups that intervened in the companies’ latest rate hike submission. But other action by the state Public Service Commission in the case could have even more significant implications.

The PSC signed off on an order in late June reducing the size of the rate request. “LGE-served schools will see their electric costs rise by approximately $1.1 million less than originally requested by LGE, and KU-served public schools should realize an estimated $1.5 million less of an increase than initially sought,” said Ron Willhite, director of KSBA’s School Energy Managers Project. LGE natural gas-served school buildings also will be less affected compared with the original rate request.

This isn’t the first success KSBA has had in intervening on behalf of schools in utility rate cases. But in this most recent case, the settlement has the potential for generating long-term change. As part of the agreement, the PSC approved special rate tariffs for schools, both public and private, in a pilot program.

While those tariffs will provide immediate energy cost avoidance, the benefit would be more long-lasting if they are continued, Willhite said.

The process
KSBA is in the process of filing a plan with the PSC for choosing the schools that will receive the special pilot tariffs and for implementing the overall program. The association will work with the Kentucky Non-Public Schools Commission –which certifies private schools – on this process, Willhite said.

“Every school (in the LGE–KU service area) won’t be eligible because they’re already on a tariff that costs them less than the pilot tariff, so it doesn’t make any sense for them to switch,” he explained. The pilot tariffs could produce estimated decreases of $5,000 to $15,000 in participants’ annual school utility bills from the otherwise applicable tariff.

The PSC set a cap on the amount of savings that the pilot schools can generate with the new tariffs: a total of $750,000 for each utility. “Those tariffs will stay in effect until the earlier of the companies’ next rate cases or July 1, 2020,” Willhite said. Those figures are included in the overall savings he cited as a result of the entire settlement.

Of the 84 districts involved, 71 have a school that would be eligible for the pilot tariffs, “and every district that has an eligible school will have a school in the pilot,” Willhite said.

He said there could be as many as 100 eligible public and private schools in each utility’s territory. KDE enrollment numbers for the schools will be used to ensure that there is a proportionate ratio of public to private schools in the pilot.

KSBA-SEMP will track the data generated with the new tariffs, which the PSC will use to determine whether to expand the pilots or make the system permanent. “One of the goals of this project is to gather information to support continuing or discontinuing the pilot rates,” Willhite said.

Energy managers
As part of the settlement in the case, LG&E and KU have agreed to apply to the PSC for authorization to continue providing funds to supplement the salary of about three dozen energy managers serving school districts in their coverage area. The current funding, also achieved through KSBA’s intervention in earlier rate cases, will end June 30, 2018. The utilities will file later this year to ask PSC to approve their funding of $1.45 million for the energy managers. That new infusion would support these professionals through June 30, 2020. 
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