Fayette County

Water bills going up in Central Kentucky for sixth time in 12 years. Here’s how much.

Water bills are going up again in Central Kentucky for the sixth time in 12 years.

On Thursday, the Kentucky Public Service Commission said it has approved higher rates as requested by Kentucky American Water Co. last November, although it authorized smaller increases than the company originally wanted.

For Central Kentuckians, the new rates include a $2.51 increase in the monthly residential customer charge, taking it from $12.49 to $15, and an increase in the usage charge from $5.06 to $5.757 per 1,000 gallons. The average monthly residential bill, using 3,869 gallons, will increase by $5.21, from $32.06 to $37.27. Individual bills will vary with usage.

The new rates take effect Friday.

Under the deal, Kentucky American gets a 15.23 percent increase in revenue worth $13.4 million, which it says it needs because of infrastructure improvements it is making in the region. The company asked for an increase of $19.86 million, or 22.6 percent, the PSC said.

“We continue to invest in water system improvements to ensure clean, safe, reliable water service for our customers,” said Nick Rowe, Kentucky-American president, in a prepared statement. “At the same time, we remain focused on cost control and increased efficiencies to balance the rate impact of these needed investments.”

Kentucky American has about 130,000 customers, mostly in Lexington and eight surrounding counties. The company’s last rate increase came in August 2016. Four earlier increases preceded that one starting in June 2007.

The PSC said it approved Kentucky American’s request to begin a “qualified infrastructure program,” or QIP, to speed the replacement of aging water mains in its systems, paying for this work through a separate surcharge on customer bills. In its rate-increase application last year, Kentucky American reported that its systems include 63 miles of cast-iron pipe that are between 69 and 134 years old and 514 miles of cast-iron, steel or cement pipe laid between 1950 and 1970.

Kentucky American will file its first QIP application by next April for Fiscal Year 2020, the PSC said.

“Aging water infrastructure replacement and resiliency are critical topics of discussion across the nation. We appreciate the PSC’s support for this new and progressive approach to funding water infrastructure improvements,” Rowe said. “The communities we serve will benefit from it.”

The PSC said it also approved the company’s request for a single rate structure across its systems, including its newest acquisitions, the Eastern Rockcastle Water Association and North Middletown. Customers of those two small systems will see rate decreases, while the effect of the decreases on Kentucky American’s other customers “will be minimal,” the PSC said.

And the PSC approved Kentucky American’s request that the actual purchase price of the North Middletown system, instead of the lower “book value,” be used in the overall rate calculations. The effect of granting that request also “will be minimal,” the PSC said. State policy is to encourage water system consolidation, the PSC said.

The debate over how water companies can value water systems they want to acquire — and then pass those costs on to their existing customers — led to a bill in last winter’s General Assembly that Kentucky American backed and Lexington city officials opposed. The bill was withdrawn.

“Since 2007, Kentucky American has more than doubled its residential rates with five increases,” Lexington Mayor Linda Gorton said at the time. “Its sixth request for an increase is now pending before the Public Service Commission. These rate increases are paying for a water plant in Owenton we didn’t need. The company wants to sell its excess capacity from that plant to other cities, and now it wants its customers in Fayette County to fund its expansion.”

Gorton’s office did not immediately respond to a request for comment Thursday.

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