Settlement Includes 9.70% ROE

The Kentucky Public Service Commission has approved a settlement that allows Duke Energy Kentucky to raise its rates for delivery of natural gas by $7.36 million. The settled-upon revenue requirement is based on a Return on Equity (ROE) of 9.70%. Duke Kentucky had sought authority to increase rates to produce and additional by $10.5 million in revenues annually. The utility cited eroding profitability in light of higher operating costs. As a result of the ruling, the monthly customer charge will increase from $16 to $16.50, while the delivery charge per 1,000 cubic feet will rise from $3.72 to $4.69. Duke Kentucky had proposed to increase the monthly customer charge to $17.50 and the delivery charge to $4.87. Re Duke Energy Kentucky, Inc., Case No. 2018-00261, Mar. 27, 2019 (Ky.P.S.C.).

Kentucky OKs Purchase of LDC by Water Utility

The Kentucky Public Service Commission has approved the purchase of the parent company of Delta Natural Gas Co. by the nation’s second-largest investor-owned water utility, Aqua America, Inc. The commission said that it expects that Aqua America’s strong record in accessing capital from public and private capital resources will be a benefit to Delta and its customers. In addition to the Kentucky PSC, the transaction is subject to approval by federal regulators, as well as by state utility commissions in Pennsylvania and West Virginia.

Aqua America acknowledged that it has not previously owned or managed a gas distribution company but pointed out that it had raised $500 million to fund an annual infrastructure replacement program and invested $3.5 billion to install and replace water and wastewater infrastructure in its existing eight-state footprint. Aqua America argued further that its experience owning and managing pipe-based public utilities and prudently implementing pipeline replacement programs, combined with the knowledge and expertise of PNG and Delta management and employees who will be retained, will ensure that Delta’s customers continue to receive quality natural gas service.

Delta Natural Gas serves about 34,500 customers in 23 counties in central and eastern Kentucky. Aqua America, also headquartered in Pennsylvania, has $5.4 billion in assets and about three million customers in eight states. Its purchase of PNG, at a price of $4.275 billion, is its first venture into the natural gas distribution business. In July 2017, the PSC approved the purchase of Delta Gas by PNG Companies LLC, a major natural gas company that is based in Pittsburgh and has more than 700,000 customers in Pennsylvania, West Virginia and Kentucky. Re Aqua America, Inc. et al., Case No. 2018-00369, Mar. 13, 2019 (Ky.P.S.C.).