FERC on March 21 upheld its May 2023 order reinstituting de-pancaking provisions in Louisville Gas & Electric and Kentucky Utilities’ transmission rates, which the utility has challenged before the D.C. Circuit Court of Appeals (ER23-2656-001, et al.). 

The commission’s May 2023 order reversed its 2019 decision allowing the company to remove provisions that de-pancaked its rates as a condition of LG&E/KU’s 2006 withdrawal from MISO, ensuring customers wouldn’t pay duplicate rates across the merged company’s territory. 

FERC’s reversal followed a D.C. Circuit order remanding the 2019 decision back to the commission after several municipal utilities in Kentucky sued. 

Upon reconsideration, FERC decided that removing the de-pancaking mitigation “will have an adverse effect on rates for the customers involved.” It directed LG&E/KU to reinstitute the provisions, retroactive to March 2021. 

LG&E/KU complied, but not without protest. It filed both its new de-pancaked rates (Rate Schedule 525) and a request for rehearing of the order on remand. FERC in November found that the utility had only partially complied with its directive, as it had not fully restored the provisions of its pre-2019 rates (Rate Schedule 402). The utility also requested rehearing of this order. 

FERC automatically rejected the utility’s rehearing request after not acting within 30 days. The order issued at the commission’s March 21 open meeting rejected the utility’s arguments as out of time: FERC found that it raised issues that should have been in response to the order on remand, not to the order on the company’s compliance filing. 

“LG&E and KU’s substantive arguments, however numerous or illustrative, go beyond compliance with the remand order’s directive,” FERC said. “Further, contrary to LG&E and KU’s argument that this compliance filing was the first opportunity to address the justness and reasonableness of RS 525, LG&E and KU had a full opportunity to raise arguments supporting their request to end de-pancaking mitigation in the proceedings leading to the remand order, as well as raise arguments concerning the remand order’s compliance directive to reinstitute the de-pancaking provisions of former RS 402, now found in RS 525, in their subsequent request for rehearing of the remand order.” 

FERC also issued a letter order March 21 approving the utility’s revisions to RS 525 (ER23-2656-002). 

LG&E/KU will now take its arguments to the D.C. Circuit, where it filed a petition of review over FERC’s 2023 order in February.