Newberry, Gray spar over Kentucky American rate increase

Newberry, Gray spar over blame for rate increase, 2008 plant decision

amead@herald-leader.comOctober 8, 2010 

Jim Gray, left and Jim Newberry

  • Open house

    Kentucky American Water has invited the public to an open house at its new Kentucky River Station II treatment plant at Hardin's Landing on U.S. 127 at the Franklin-Owen county line.

    The free event — from 2 to 5 p.m. Oct. 22 — will include tours of the plant, refreshments, giveaways and door prizes.

  • Union tracking water company

    The Utility Workers Union of America, AFL-CIO, launched a Web site Thursday to track the corporate actions of American Water and its subsidiaries, including Kentucky American Water.

    The site — — is designed for ratepayers, employees, regulators, media representatives and the general public, the union said.

    Kentucky American was the subject of one of the site's initial posts because it paid a fine in August for repeatedly violating a state Public Service Commission order on how it reported dividends paid to its former parent company.

With the sting of a 37 percent water-rate increase fresh on voters' minds, the candidates for mayor of Lexington sparred Thursday on who should take the blame.

Both say they oppose the rate increase — which is likely to be partly rolled back soon — but that doesn't lessen the bickering.

Mayor Jim Newberry took Thursday's opening shot at a Lexington Forum breakfast at Keeneland Race Course.

"One of the bones of contention here is, Vice Mayor Gray is going to say I didn't want to look at alternatives," he said. "Well, I did want to look at alternatives."

But, Newberry said, the place for alternatives to be evaluated was before the state Public Service Commission, which has the expertise to consider the complex issues involved in proposals that were being pushed by Kentucky American Water and the Louisville Water Co.

"That's not true," Gray said. "What I said was, we should not give over our decisions as a city to a third party."

The squabble is over a vote the Urban County Council took early in 2008.

The PSC was considering a proposal by Kentucky American to build a new treatment plant on the Kentucky River north of Frankfort, 120 miles from its existing plant in Fayette County.

The PSC had allowed the Louisville Water Co. to intervene in the case because the company wanted to build a pipeline to send treated Ohio River water to Lexington.

After considering the issue for months, the PSC noted that Lexington had not taken an official stand on the issue, and it invited the city to do so.

Gray was one of seven council members who wanted to pay a University of Kentucky expert $15,000 to weigh the two proposals.

Newberry opposed spending the money, saying the PSC had its own experts. Eight members of the council agreed with him.

Ultimately, the city had no official response to the PSC request for input.

On Thursday, Gray characterized that as giving Kentucky American "a blank check," adding, "That's what the mayor endorsed."

Ultimately, the PSC decided that the costs of the two proposals were likely to come out even, but it said the Louisville proposal "never evolved beyond a series of concepts."

Also at the forum meeting, Gray challenged Newberry to give back $20,000 in contributions he had received in his 2006 and 2010 campaigns from people with ties to Kentucky American.

Newberry noted that at a July PSC hearing on the proposed water increase, Gray suggested that the new treatment plant was not needed.

"That destroyed his credibility on this issue," Newberry said. "All of us who have been through the droughts ... know we have a water-shortage issue."

Later Thursday morning, when Gray appeared on WVLK-590 AM's The Lexington Morning News With Jack Pattie, Pattie asked Gray to name the main issue in the race.

"Water bills," Gray said.

Several callers to the show, some of whom wanted to talk about other issues, also mentioned the rate increase.

Kentucky American requested the increase from the PSC in February and implemented it last week because the PSC had not reached a decision.

That decision is expected about the middle of the month. Historically, Kentucky American has received 50 to 60 percent of what it requests. Because it put the full request into effect, it probably will have to refund the difference for the time that the 37 percent increase is being levied.

The new treatment plant, meanwhile, is sending water to Lexington.

Kentucky American officials have invited the public to a dedication of the $164 million plant on Oct. 22.

Reach Andy Mead at (859) 231-3319 or 1-800-950-6397, Ext. 3319.

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