Kentucky American Water Co. has gained approval to replace its nearly 100-year-old filtration plant on Richmond Road in Lexington, the state Public Service Commission announced Tuesday.
Tuesday's announcement came after the PSC agreed with the water company that a new plant is the most cost-effective way to address the old building's structural and operational problems.
Kentucky American officials estimate the cost of the new plant to be $15.6 million, according to a news release. The utility can seek recovery of the plant's costs by asking to raise customers' rates.
The Richmond Road plant can treat as much as 25 million gallons of water daily. It was built in 1924. Newer filters will not change the plant's overall output but are designed to be more effective and efficient than the ones they replace. They will provide reserve capacity, which the current plant does not have.
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Neither the state attorney general's office nor the Lexington-Fayette Urban County Government chose to participate in the case.
Kentucky American serves about 126,000 retail and nine wholesale customers in Central Kentucky, with most of the retail customers in Lexington.
In October 2013, the PSC granted Kentucky American a rate adjustment that was to increase its annual revenue by $6.9 million. Average residential customers using 5,000 gallons per month saw their monthly bills rise from $35.40 to $38.95, an increase of $3.55, or about 10 percent.