Settlement reached in Kentucky utilities bid

PPL Acquisition Settlement outlines a base rate freeze until 2013, ROE sharing above 10.75%, and deferral of extraordinary costs, pending regulatory approval by the Kentucky PSC, FERC, and other authorities after antitrust clearance.

Power provider PPL Corp. said it has reached a settlement in its $7.6 billion bid to acquire E.On U.S., the parent company of Louisville Gas & Electric Co. and Kentucky Utilities Co.

Among the settlement terms, PPL agreed that the two utilities would commit not to implement any base rate increases before January 1, 2013. But rate increases that took effect last month will remain in place, the company said.

The deal allows the utilities to seek approval for the deferral of "extraordinary and uncontrollable costs," however, as seen in the FirstEnergy Ohio settlement example elsewhere.

The agreement also requires PPL Electric Utilities to split earnings above a 10.75 percent return on equity with customers.

The Kentucky Public Service Commission is expected to make a decision on the proposed acquisition by the end of the month, following PPL's recent purchasing plan approval in another case.

"We are hopeful that the Kentucky PSC will agree with the parties to this settlement and conclude this acquisition is consistent with the public interest," said James Miller, PPL's chairman, president and chief executive.

The Federal Trade Commission and the U.S. Department of Justice reviewed the proposed offer for possible antitrust issues and cleared the deal last month.

The deal also must be cleared by the Tennessee Regulatory Authority, Virginia State Corporation Commission and the Federal Energy Regulatory Commission for final authorization.

Louisville Gas & Electric and Kentucky Utilities provide electricity to 941,000 customers in Kentucky, Virginia and Tennessee.

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