A rate increase requested Friday by Kentucky American Water would add an average of $5.76 to residential bills each month, raising the typical payment about 17.6 percent, from $32.75 to $38.51.
Kentucky American filed an application with the state Public Service Commission, which will review the request in the coming months. No changes would be made to water bills before July 27.
It is the company's first rate-increase request since February 2010.
The company said in a news release that the increase will raise $12.3 million in additional revenue to help offset some $58 million in capital investments the company has made in recent years. Those improvements include replacement of aging water mains and manually-read water meters and improvements to water treatment plants, such as the replacement of pumps.
Kentucky American customers will receive a legal notice in the mail explaining the proposed rate change, said company spokeswoman Susan Lancho.
The public service commission has 10 months to make a decision on the request, said spokesman Andrew O. Melnykovych. By law, the Kentucky Attorney General represents the Kentucky American customers in the review.
In 2010, Kentucky American requested a 37 percent rate increase; the public service commission ultimately approved a 29 percent increase. In June 2009, the public service commission approved an 18 percent increase for Kentucky American customers.
Lexington-based Kentucky American Water, a subsidiary of American Water, says it provides services to about a half-million people, mostly in Lexington but also in 11 other communities.
Mayor Jim Gray called the possible rate increase "another bad deal for our citizens, families, and businesses," saying that Fayette County residents already pay more than the regional average.
"I will fight this increase because it's unfair, it's wrong, and it hurts Lexington's ability to create jobs," Gray said. "I urge the Public Service Commission to take a hard and honest look into this request for a third significant rate increase in five years and to re-examine all the claims that led to the investments Kentucky American has made — including the building of the new Owen County treatment plant."