Cities and businesses that have long used Lake Cumberland as a free water source will have to begin paying once the federal agency that controls the giant reservoir finishes a study of the issue.

The price of using the lake as a water source has not been established, but local officials said water systems would likely have to raise rates to cover the additional costs.

The bigger concern for some, however, is a requirement under which users would have to pay a share of any future repair costs on Wolf Creek Dam, which impounds the lake.

The $600 million price tag of a project completed in 2013 to seal leaks at the dam is fresh on their minds.

It’s not clear the dam would ever need such expensive repairs again. And if it did, the share required of water users would be less than one percent of the total.

Still, even a fraction of the cost of a major repair project could be difficult for small cities to manage, some officials said.

“That’s a frightening proposition,” said Scott Upchurch, manager of the Monticello Utility Commission.

The issue has come up because supplying water was not an authorized purpose for the Wolf Creek Dam project when Congress approved it in the 1930s.

The authorized purposes were to control damaging flooding on the Cumberland River and to generate hydroelectricity.

In the decades after the dam was finished in 1951, however, the lake became increasingly important as a water source for water systems as the population in the region grew.

Congress said the corps could accommodate that need, but only if it didn’t have a significant impact on the authorized purposes of the dam and lake, said Loren McDonald, an engineer heading the agency’s study of allocating water for municipal systems.

That’s what the corps is studying — the feasibility of reallocating storage capacity in the lake from hydropower to water supply, and the amount to be assigned to each user over the next 20 years.

Once the study is done, municipal water systems and industrial users will have to begin paying for their share of water storage in the lake if they continue using it as their water source. The study will help determine the amount.

That’s not scheduled to happen until December 2018.

Each user would have to pay a one-time fee for their portion of the storage space. That would be based on the amount of hydropower capacity lost to water supply or the original construction cost of the dam in today’s dollars — whichever is higher, according to a letter the corps sent users.

Each user also would have to pay an annual fee for their share of the cost of operating and maintaining the dam and lake.

McDonald said there are 11 users affected by the study.

She identified them as the water systems operated by Somerset, Burnside, Monticello, Jamestown, Albany and McCreary County; a federal fish hatchery in Russell County; and General Burnside Island State Park, Woodson Bend Resort, Kingsford Charcoal and a power plant operated by East Kentucky Power Cooperative, all in Pulaski County.

Somerset Mayor Eddie Girdler said it doesn’t appear the annual fee for water users would be onerous.

As an example, the yearly fee for the city of London is $3,000 to $5,000, said Steve Baker, manager of the London Utility Commission. The city gets water from Laurel River Lake, which the corps also manages.

The initial, one-time fee is a worry around Lake Cumberland, however.

Girdler said he understood that could be $1 million or more for Somerset, which provides water to 20,000 households in Pulaski and other counties.

“We were very concerned about this initial cost,” Girdler said.

Girdler and other local officials said water systems operate on essentially a break-even basis, meaning new costs would likely mean a need for higher rates.

“When we have another bill, it’s going to be passed to local residents,” said Upchurch, the Monticello utility manager.

The water users will be able to spread that initial fee over 30 years.

Josh Callihan, general manager of the Barbourville Utility Commission, said the one-time fee under the city’s 2009 agreement to get water from Laurel River Lake was $1.9 million. The city is paying that over 30 years.

Barbourville was over a barrel because it needed to increase its water supply and the corps said it wouldn’t allow that without a storage agreement and payment, Callihan said.

Barbourville raised the bill on each meter by $1.30 a month to cover the cost, he said.

“That money’s gotta come from somewhere. It’s going to come through rates,” Callihan said.

The coming fees on Lake Cumberland irk some local officials because they don’t think their systems withdraw enough water to have much of an impact on the lake, one of the largest man-made reservoirs in the Eastern U.S.

They’re also bothered by the potential for even larger bills in the future.

Girdler, the Somerset mayor, said the federal government should have to pay for major repairs or replacement of a corps dam.

“They should never put dam replacement or dam repairs on a small city,” he said. “What if they decide a new dam is two or three billion dollars?”

Corps officials said the agency is required under federal law to charge water systems for storage and a share of what it costs to operate and maintain dams.

Lt. Col. Stephen Murphy, commander of the Corps’ Nashville District, noted in a recent commentary that the benefits of Lake Cumberland are undeniable, “but they are also not free.”

Lake Cumberland is the only long-term storage reservoir in the Cumberland River basin where municipal and private water users don’t yet pay a fee for storage, according to the agency.

Such fees also are common at corps lakes across the country, McDonald said.

“Lake Cumberland truly is an anomaly across the country,” McDonald said.

The corps started a study more than a decade ago that would have led to water-storage fees for Lake Cumberland users, but Congress used budget language to block the corps from finishing the study.

That language was not renewed after 2011, McDonald said.

Republican U.S. Rep. Hal Rogers, whose district includes some Lake Cumberland counties, opposed the earlier water reallocation study, according to his office.

However, the Corps of Engineers told Rogers other potential users were showing interest in the lake as a water source.

The corps is required by law to do a reallocation study to clear the way for that, and Rogers did not want to stand in the way, according to his office.

“Improving access to sanitary water has been one of Congressman Rogers' main goals,” the statement said.