Kentucky American Water will implement a 37 percent rate hike on Wednesday, according to a news release, a move Lexington Mayor Jim Newberry called "unfair and extreme."
Vice Mayor Jim Gray, Newberry's opponent in the Nov. 2 mayoral election, responded with a statement blaming the mayor for the increase.
The average residential customer's monthly bill will rise from $25.46 to $34.90 under Kentucky American's new rates. The average customer uses 4,470 gallons a month.
The water company filed a request to raise its rates in February. The Kentucky Public Service Commission has not given final approval to the plan but must make a decision by Dec. 26.
State law allows Kentucky American to implement the new rates, then issue refunds to customers for the difference, plus interest, if the PSC approves a rate lower than what the company asked for. If that happens, Kentucky American said, the refunds would be credited to customers' accounts.
The company says the higher rates are needed to help pay for a $164 million water treatment plant and transmission lines that recently began operating. The system is intended to address a water supply deficit in Central Kentucky, the company said.
Newberry has said the plant was needed, but he took issue with the amount of the increase, saying in the news release that it "imposes a hardship on many local citizens."
The PSC approved Kentucky American's last rate increase, 18 percent on June 1, 2009.
"Overall, this increase raises rates by approximately 60 percent over the 2008 rates," Newberry said.
The mayor appeared at a PSC hearing on the increase in August, delivering the names of 4,310 people who signed a petition opposing it.
On Tuesday, Newberry criticized Kentucky American for not waiting for the PSC to rule on the case before implementing the new rates.
"While Kentucky law permits the action they have taken, Kentucky American has let greed trump good judgment," Newberry said. "Good judgment would have required them to wait a few more days for the commission's decision before imposing an exorbitant increase. Greed made them move forward."
Susan Lancho, spokeswoman for Kentucky American, responded that "this rate increase, similarly to the water quality management fee the city implemented in January, was a tough but necessary decision to ensure that much-needed infrastructure investment can occur. Our pledge to our customers is that we will continue to provide service as efficiently as possible, continue to provide them information on ways to manage their water usage, and work with customers experiencing financial difficulties ... ."
She said the plant will meet Central Kentucky's water needs for at least 20 to 30 years.
Gray has questioned whether the water-treatment plant was even necessary.
"This is Jim Newberry's 60 percent rate increase," he said in a statement. "He's been too cozy with Kentucky American since the beginning and when he had the chance to do something, to examine the cost and the alternatives, he said 'Full throttle ahead' with the new $160 million plant. He made a conscious decision to side with Kentucky American when he had the chance to side with the citizens."
Newberry's campaign manager, Lance Blanford, responded, "Vice Mayor Gray's attacks are baseless. He has used Lexington's critical water supply problem as a political football, flip-flopping on the issue time and time again. If he truly cared he would have joined Mayor Newberry in protecting taxpayers at the official Public Service Commission hearing in Frankfort on Aug. 10."
