Herald-Leader Editorial

Don't give water utility more control; Under bill, ratepayers would fund expansion

February 27, 2014 

American Water's corporate strategy in Kentucky is to buy up smaller public water systems and force Lexington ratepayers to foot the bill for the purchases.

Since last fall, Kentucky American Water, the local subsidiary, has been shopping around a bill that would make such acquisitions more profitable and less risky for the company and its stockholders by saddling existing customers and the new customers it would acquire with unjustifiable costs and rate increases.

Kentucky American's bill would accomplish this by enacting a new method and process for determining the value of such acquisitions and by reducing the Public Service Commission's authority to referee the transactions.

KAW employed a pair of high-powered lobbyists — Democrat Skipper Martin and Republican John McCarthy — to enlist a lawmaker to champion such legislation.

And on Feb. 20, freshman Sen. Chris Girdler, R-Somerset, filed Senate Bill 152, an act relating to water or sewer utilities.

This anti-consumer bill would be bad for everyone affected, except the New Jersey-based corporation that owns Lexington's water utility, and, of course, its lobbyists.

Now Girdler seems none too eager to claim it. When questioned by the Herald-Leader's Jack Brammer, he said he doesn't expect SB 152 to go far in this session and called it "a starting point of conversation" for communities that may want to allow other entities to purchase and operate their water systems.

Far better for the public interest to be conversing about House Bill 381, sponsored by Reps. Derrick Graham, D-Frankfort, and Robert Damron, D-Nicholasville. It would abolish the seat now held by Kentucky American on the board of the Kentucky Infrastructure Authority.

Maybe, when the KIA was created in 1988, there was a reason to allot a board seat to "for-profit private water companies."

But if there ever was a good reason for giving a private, for-profit company a say in approving financing for local governments' and taxing districts' public works projects, it is no longer apparent.

Instead there is the appearance of a conflict of interest. As one of the members of the 11-member KIA board, Kentucky American is in a position to influence decisions about the future of water and sewer utilities it might want to buy.

Under HB 381, rural and urban water interests would still be well represented on the KIA board, which would continue to include someone recommended by the American Waterworks Association, the Kentucky Rural Water Association and the Kentucky Municipal Utilities Association.

In fact, Kentucky American might even retain its seat depending on who the Kentucky Chapter of the American Waterworks Association thinks best represents the interests of water utility professionals.

Although the House Local Government Committee voted to table consideration of HB 381 Wednesday, Graham and Damron should not give up on it yet. There is no valid reason for a private for-profit company to have representation on the KIA board.

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