Electric increases fuel governor's race as candidates vow to defend Kentucky's low rates



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LOUISVILLE, Kentucky — Tammy Stewart makes about $1,600 a month and it goes quickly: a mortgage and a car, insurance, utilities and student loans.

So she got a little worked up when Louisville Gas & Electric proposed raising her power and gas bill.

"That little bit of increase is a loaf of bread, a gallon of milk, maybe a jar of peanut butter," she told the Kentucky Public Service Commission last month.

Kentucky's candidates for governor are seizing that kind of populist fervor in an election cycle already dominated by debates over job creation.

They will have plenty of opportunities. In this state that consistently ranks among the lowest utility rates in the county, three of the four major investor-owned companies all have rate requests pending before the Public Service Commission with proposed increases of as much as 16 percent.

Likely Democratic nominee Jack Conway touts his status as the only Democratic attorney general in the country to join a lawsuit against the Environmental Protection Agency's new emission standards for coal-fired power plants.

"It will be a big issue," Conway said. "I'm concerned about the economy and I'm concerned about the fact that we use our utility rates as a way to lure business here."

For Republicans, the issue is a chance to nationalize a governor's race in a state that tends to favor Democrats at the local level. All four candidates' in May 19th's Republican primary - Matt Bevin, James Comer, Hal Heiner and Will T. Scott - have said they would ignore the federal Environmental Protection Agency's requirement that Kentucky submit a plan for cutting its carbon emissions 30 percent by 2030, following the lead of U.S. Sen. Mitch McConnell who thrashed his Democratic opponent last year by following a similar message.

"One of the greatest advantages we have as a state is our low utility rates. That's going to change because of the unnecessary regulations of the Obama administration," said Comer, the state agriculture commissioner.

Tom FitzGerald, a Kentucky environmental lobbyist, argued that would be a mistake. He said if Kentucky officials don't offer a plan, the federal government will do it for them.

"To not avail yourself of the opportunity to develop a plan that is better tailored to Kentucky's unique circumstances ... seems very foolish to me," he said.

Kentucky's utility rates are consistently among the lowest in the country, thanks to the state's abundance of coal and its almost exclusive reliance on coal-fired power plants to produce electricity. The state's political leaders use the low rates as selling points for major manufacturers, and Kentucky is now the largest aluminum maker and the third largest auto maker in the country. Kentucky's overall power rate is the seventh lowest in the country, according to the U.S. Energy Information Administration.

But the coal industry's decline coupled with strict emission standards from the Environmental Protection Agency have led to higher Kentucky power rates. Kentucky Utilities and Louisville Gas & Electric announced a settlement this week in which Kentucky Utilities customers will see a $9 monthly electric increase and LE&G customers will pay $1.25 more per month for gas following a winter that saw temperatures plunge to 20 below zero.

Kentucky Power, which serves about 20 counties in eastern Kentucky's coal country, has raised its rates twice since 2005. The utility is requesting another 16 percent increase, about an extra $22 per month for the average residential customer.

"The cost is going up because of the expense associated with keeping (coal) clean," Kentucky Power CEO Greg Pauley said.

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