Rate Increase Request Heard This Week

Jun 3, 2013

Kentucky American Water Company President Cheryl Norton
Credit Kentucky American Water Company

Formal hearings begin Tuesday on a rate increase requested by Kentucky American Water.  And, state regulators have already heard some tough talk from Lexington’s mayor.  Hoping to cover the cost of infrastructure improvements, computer upgrades and declining usage, Kentucky American Water Company seeks a 14 percent increase in rates.  If approved by the State Public Service Commission, the average water customer would pay an extra five to six dollars a month.

  The increase comes just a few years after a price hike that helped cover the cost of a new water treatment plant in Owen County.  Lexington Mayor Jim Gray still believes that expenditure was unnecessary.

“Now, there were many people including myself who cautioned about the need for the capital improvements including the new water plant and the size of it and said this is potentially over building.  What we’ve learned is that, in fact, demand has declined, just like it has across the country,” said Gray.

Mayor Gray also criticizes Kentucky American for ending a billing partnership in which it collected sewer fees for the city.  Gray says the move cost Lexington about three-million dollars this year.

Kentucky American President Cheryl Norton defends the move…saying the old billing arrangement confused some customers.  As for the dip in demand, Norton predicts a turnaround as the region’s commercial and residential sectors grow.

“Water use on a per customer basis is declining, but as you have growth in the community and as we’re starting to see growth pick back up, we’ve gone back and looked at the projections that were done back before this plant was built when we determined the size needed for this plant and those projections are holding true,” said Norton.

Close to a decade ago, Lexington considered a city-takeover of the water company.  In the end, voters rejected the idea….but Mayor Gray still has reservations about private ownership.  By giving Kentucky American, in essence, a monopoly, he says higher rates come along too often. 

“In light of these actions, I think anything is on the table.  Our citizens should be upset about this.  It’s really what I consider to be outrageous civic behavior by a corporate citizen,” added Gray.

Kentucky American’s Cheryl Norton disagrees and hopes the issue of a public takeover does not resurface.

“We provide a very high level of service and we think it’s at a very fair cost.  So, we would hope that those discussions wouldn’t come up because I think the city has enough things that they need to deal with, enough issues and problems that they need to deal with, that they should be focused on them and let us focus on what we do which is water,” said Norton.

The Public Service Commission hearing begins Tuesday morning at its Frankfort office.