Kentucky Utilities Co. and sister company Louisville Gas and Electric will be sold to Pennsylvania power giant PPL Corp.
Germany’s E.ON A.G. has entered into a definitive agreement to sell its Louisville-based E.ON U.S. subsidiary — which owns and operates KU and LG&E — to PPL (formerly Pennsylvania Power and Light) for $7.625 billion, E.ON confirmed in an announcement Wednesday evening.
KU serves thousands of electric customers in portions of Henderson, Union and Webster counties.
“As part of the transaction, PPL is making a series of commitments … ensuring that the (LG&E/KU) headquarters remain in Kentucky for 15 years, the management team remains intact, no jobs will be lost as a result of the transaction, our community investment levels remain unchanged and our support of economic development continues,” E.ON U.S. Chairman, CEO and President Victor A. Staffieri said in a statement.
E.ON said KU and LG&E will preserve their names, and the power they generate “will be dedicated to their existing and future native load customers,” the company said.
The sale would be subject to the review and approval by the Kentucky Public Service Commission, among other agencies, PSC spokesman Andrew Melnykovych said.
Once a formal application is received, the PSC will have 120 days to review whether PPL has the managerial, financial and technical capabilities to provide reasonable utility service as well as to determine whether a sale is in the public interest, he said. Public hearings will be conducted as part of the review.
Melnykovych declined to comment on what impact a sale of KU and LG&E might have on customer rates. “It’s too speculative,” he said, though he noted that both companies already have proposed rate increases under review by the PSC.
The sale also is subject to approvals by the Federal Energy Regulatory Commission and Virginia State Corporation Commission.
E.ON said it expects to complete the transaction by the end of the year.
In all, KU sells electricity 545,000 home and business customers in portions of 77 Kentucky counties and five counties in Virginia.
LG&E serves 396,000 electric customers and 321,000 natural gas customers in the greater Louisville area.
KU, based in Lexington, and Louisville-based LG&E operated independently for decades until LG&E Energy Corp. acquired KU in the 1998.
LG&E Energy itself was acquired by British power conglomerate Powergen in late 2000.
E.ON A.G. then acquired Powergen in early 2002. Press reports indicate that E.ON now is seeking to reduce debt by selling certain operations.
PPL’s roots date to 1920, when eight utilities in eastern Pennsylvania merged into a single company, Pennsylvania Power & Light Co., headquartered in Allentown, Pa.
Today PPL generates and delivers power to approximately 1.4 million homes and businesses in eastern and central Pennsylvania as well as 2.6 million customers in Wales.
PPL is ranked 300th on the 2010 Fortune 500 list of America’s largest corporations, with operating revenues of nearly $7.6 billion, down from $8.0 billion in 2008.
It ranks as the nation’s 18th largest utility company on Fortune’s list.
Acquiring KU and LG&E “will transform PPL into a more geographically diverse utility holding company with combined annual revenues of about $10 billion,” PPL said in its announcement.
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