ULH&P To Seek Increase in Natural Gas Base Rates

    Business Editors

    COVINGTON, Ky.--(BUSINESS WIRE)--Feb. 18, 2005--The Union Light, Heat and Power Company, an affiliate of Cinergy Corp. (NYSE:CIN), announced today that it will file with the Kentucky Public Service Commission (KPSC) to seek a base rate increase of $14 million, or approximately 7 percent in annual revenues, for natural gas distribution service. The increase would be effective in the fall of 2005.
    The filing of the application at this time was required by the Kentucky PSC when it approved ULH&P's last base rate increase in 2002, if the company intended to continue annual recovery of costs associated with its accelerated main replacement program under a tracking mechanism approved by the PSC. Currently, ULH&P's rates include approximately $4.5 million annually for the replacement program. In this application, the company is asking the PSC to continue the tracking program because it allows the increasing costs to be phased into rates incrementally rather than all at once.
    The gas main replacement project was initiated to improve the reliability and safety of the gas distribution system. Through 2004, ULH&P has replaced approximately 90 miles of cast iron and bare steel pipe, or about 40 percent of the old mains in its system. This program has reduced gas leaks repaired in the ULH&P system by more than 45 percent.
    "We are building a safer and more reliable gas distribution system as a result of the $67 million that we will invest by September 2006 in new mains through the replacement program," said Greg Ficke, president of ULH&P.
    For a residential customer using 10,800 cubic feet of natural gas monthly, the requested increase would result in a total monthly bill of $130.74 compared with the current bill of $120.30. The actual amount of the bill will depend on the cost of gas at the time the increase takes effect.
    Rates set by the PSC in 2002 were based on costs incurred in 2000. Through September 2006, ULH&P projects that it will invest $123 million in improvements to its system since the last base rate increase and is also experiencing other cost increases. The requested increase was reduced by $574,000 per year in maintenance expenses because the improvements in the gas distribution system will lower the number of leak repairs.
    Base rates cover the company's costs to operate and maintain its physical gas system, which consists of the facilities and equipment necessary to deliver gas to customers' homes and businesses. Base rates are separate from the cost of gas ULH&P purchases from suppliers to meet customer needs. Gas costs are billed to customers on a dollar-for-dollar basis without any profit to ULH&P.
    ULH&P plans to continue its low-income weatherization program and Home Energy House Call program to assist customers in managing their energy usage and bills.
    ULH&P serves approximately 92,000 natural gas customers in six Northern Kentucky counties.

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CONTACT: Cinergy Corp., Cincinnati Steve Brash, 513-287-2226 Kathy Meinke, 513-287-2121 Website: www.cinergy.com

KEYWORD: KENTUCKY OHIO INDUSTRY KEYWORD: OIL/GAS ENERGY UTILITIES SOURCE: Cinergy Corp.

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