Kentucky American Water files for rate increase. How much might your water bill go up?
Kentucky American Water is asking the Kentucky Public Service Commission to approve a rate increase that would generate $26 million more a year in revenues for the company.
The new rate would represent a 22.7% revenue increase and would cost the average residential consumer using 3,800 gallons about $9 more per month, Kentucky American said. Individual water bills will vary.
If approved, the new rates would take effect in 2024, Kentucky American said in a news release.
“Kentucky American Water is requesting an increase in rates because its existing rates for water service do not afford Kentucky American Water the opportunity to recover its reasonable operating costs or to earn a just and reasonable rate of return on the investments made since the rates approved in the Company’s last rate case,” the water company said in the application it filed Friday with the PSC. “Kentucky American Water must be granted a rate increase at this time in order to maintain its facilities and provide service commensurate with its customers’ reasonable expectations and the Public Service Commission’s requirements, as well as attract capital at reasonable rates.”
The company said in a news release that it is also asking the PSC to approve a new plan that would reduce the monthly service charge and consumption charge for “qualified residential customers” who might have trouble affording water service.
According to the PSC filing, residential customers with a household income of half the federal poverty level or less would be eligible for a 60% discount on their consumption rate and the service charge for their meter. Those whose income is between 50 and 100% of the federal poverty level could get a 20% discount under the plan.
“Kentucky American Water continues to address aging infrastructure by investing in its water treatment and distribution facilities. This commitment helps ensure service reliability and water quality to help protect customers and the communities we serve,” Kathryn Nash, president of Kentucky American Water, said in the news release. “We also remain steadfast in addressing the needs of our most vulnerable customers by including components in our request to keep rates affordable.”
The documents filed with the Public Service Commission also indicate that Kentucky American wants to transition its meter system to a “cellular Advanced Metering Infrastructure” that would allow meters to be read remotely through an automated system.
The water company said the new system would provide “operational efficiencies,” allow leaks to be detected sooner and give customers the ability to better track their water consumption.
Kentucky American said in the filing that the change is “not necessarily anticipated to result in a workforce reduction,” as meter reading staff could take on other duties.
The transition would take place over the next decade, as water meters reach the end of their lifespan and need replacing, the filing indicates. Kentucky American has proposed charging customers who opt out of the new meter system a $28 monthly fee.
The last time the water company’s rates were raised was in 2019.
The rates approved by the PSC then were less than the 22.6% increase the water company had asked for but still represented a 15.23% revenue increase.
At that time, the PSC granted Kentucky American’s request for a “qualified infrastructure program,” which added a surcharge to customers’ monthly bills to help pay for replacing aging water lines.
Since then, the company said it has made “$330 million in water system investments ... which has allowed the company to continue providing safe and reliable water service, as well as the increased costs of procuring chemicals, goods and services,” the news release issued Friday stated.
In its latest filing, the water company said it wants to do away with the QIP surcharge and roll the infrastructure costs into customers’ base rates.
The current residential rate for water consumption is $5.76 per 1,000 gallons, and the new rate would be $7.82 per 1,000 gallons. The monthly service charge would go from $15 a month to $20 a month for a 5/8-inch meter, according to the filing.
Consumers will have an opportunity to provide input on the proposal by submitting written comments, attending public hearings or getting involved in consumer advocacy groups.
This story was originally published June 30, 2023 at 9:33 PM.
