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Lexington, state reach agreement on KU, LG&E rate increase. How much will bills go up?

State and Lexington city officials announced Monday they had come to an agreement that would limit a proposed rate hike for Kentucky Utilities and Louisville Gas & Electric by roughly one third.

In November, KU and LGE filed for a rate increase of $331 million.

Instead, under a settlement agreement between Lexington, Louisville and Attorney General Daniel Cameron’s office and the utility giants, that rate increase will be decreased by a third.

The cities of Lexington, Louisville and the attorney general’s office intervened in the case on behalf or rate payers.

The settlement agreement must be signed by the Public Service Commission, which oversees public utilities. The agreement must also be approved by the Lexington-Fayette Urban County Council.

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Kentucky Utilities serves 77 central Kentucky counties including Fayette County.

Kentucky Utilities residential customers will see an average monthly bill increase by $7.82 a month in the first year; $8.63 a month in subsequent years, according to a release from Mayor Linda Gorton’s office.

The new rates will go into effect later this year if the Public Service Commission signs off on the agreement.

“Our overall goal has been to keep the cost of living low in Lexington,” Lexington Mayor Linda Gorton said. “That is especially important right now as we work our way out of a pandemic.”

As part of the settlement, KU and LGE also agreed not to seek another base rate increase for four years. Over the past decade, KU has sought rate increases every two years. Also included in the agreement is no increases to the fixed customer charge, the amount customers pay regardless of how much energy they use.