Posted on Sat, May. 03, 2008

Towns must decide on sharing regional water

KENTUCKY AMERICAN HAS TO SETTLE PLANT'S SIZE, FUNDING

By Andy Mead

AMEAD@HERALD-LEADER.COM

It's put-up-or-shut-up time for the towns around Lexington that have talked for years about sharing in a regional water system.

At a Bluegrass Water Supply Commission meeting Thursday, a June 2 deadline was agreed on to decide whether the commission -- acting on behalf of some of its members -- will buy into Kentucky American Water's newly approved treatment plant and pipeline.

"The window of opportunity ... is rapidly closing," said Damon Talley, the commission's attorney.

The big question: Which towns are willing to make a commitment?

If the commission agrees to buy 5 million gallons of water a day, Kentucky American would increase the capacity of its plant from 20 million gallons a day to 25 million. The commission would own 20 percent of the plant and pipeline, with the construction and operating costs falling only on the towns that get the water.

The commission represents Winchester, Frankfort, Georgetown, Nicholasville, Paris, Mount Sterling, Lancaster, Cynthiana and Berea. (Lexington also is a member, but unlike the others, it does not own its water utility.) It was started in 1999 as a group of water utility managers who dreamed of connecting their systems so they would have a larger and redundant source of water.

That evolved into a plan, developed with Kentucky American Water, to build the new treatment plant on the Kentucky River north of Frankfort and the pipeline to bring it back to Lexington. Other pipes would connect commission members to Kentucky American like spokes from a hub. The idea was that a regional system would be cheaper for everyone, including Kentucky American's Lexington customers.

Now, nine years later, Kentucky has permission from the Public Service Commission to build the $160 million plant and pipeline. But the water supply commission has no money to pay for its part of the deal.

The commission asked Congress and the Kentucky General Assembly for $60 million this year for a share of the Kentucky American project and the connections for the nearest towns: Nicholasville, Georgetown, Winchester and Frankfort. It came up with nothing.

Commission members blamed that in part on the controversy surrounding whether the Kentucky American project would be approved. Some legislators strongly supported a rival plan by the Louisville Water Co.

Now the only options for the water supply commission are a deal under which Kentucky American finances the commission's portion or a "rent-to-own" option. Both will be more expensive than the cash-up-front option that failed.

And there might be fewer towns that want in. Frankfort is looking to Louisville for its water. Winchester, which needs a lot of water relatively quickly to satisfy an industrial customer, is considering building a plant of its own, or negotiating its own deal to be a Kentucky American customer.

Kentucky American says it still wants its new plant to be part of a regional system. But with construction expected to begin in early summer, it needs a commitment soon. An earlier April 1 deadline for the commission has already passed.

Frankfort utility officials have only one meeting before the new June 2 deadline, and appear unlikely to switch back to the Kentucky American plan, because they have settled on Louisville.

Winchester Mayor Ed Burtner, who represents his town on the commission, said he expects that Winchester officials will have several meetings in the next few weeks as they decide. The water supply commission also is expecting extra May meetings.

Bob Riddle, who represents Georgetown, expressed frustration at the commission trying to decide what to do while one or more of its members still are pondering their own water supply futures.

"It would be a tragedy not to build that (extra) 5 million gallons," he said.