Fayette County

Kentucky American Water customers voice opinions about rate increase

2014 Staff file photo

Customers of Kentucky American Water voiced opinions about a proposed increase in the utilities rates at a meeting Tuesday at the Bluegrass Community and Technical College’s Leestown campus.

Kentucky Public Service Commission spokesman Andrew Melnykovych delivered a presentation on the commission’s rate-making process, and then four customers of the water utility spoke about the proposition.

Lovell Foushee, owner of Foushee Farms in Lexington, said Kentucky American Water mismanaged an easement on his property, affecting his farm and his view of the company.

“There is a number of reasons I’m against the water increase,” Foushee said. “It’s regretful that I’m that way, but, again, I feel like the city of Lexington needs their own water company and their own capacity to control rates.”

Foushee previously filed a public comment with the Public Service Commission, which can be found on their website along with other comments pertaining to the case.

$12.5 million revenue gained from last rate increase in 2013

In his testimony, Marty Solomon of Lexington questioned Kentucky American Water’s need for increased revenue, noting the company’s increase in net profit over the last 10 years.

“If Kroger made an 85 percent profit increase by raising prices, the competition would beat them out of business,” Solomon.

If Kroger made a 85 percent profit increase by raising prices, the competition would beat them out of business.

Marty Solomon, Lexington resident

Warren Rogers, a Lexington resident and owner of a construction company that has worked with Kentucky American Water and other municipal utilities, applauded the company for investing in Lexington’s water system.

“I’m thankful that I live in a community with a water utility that is interested in quality infrastructure,” Rogers said. “I wouldn’t want PSC to do anything to discourage investment in infrastructure.”

Customers can expect a 17 percent increase, or about $6 on the average monthly bill of $34, according to the company, if the rate change is enacted. The company would see an annual revenue increase of about $13 million per year, or about 15 percent.

The water company also asked the Public Service Commission for a 3 percent surcharge as an infrastructure maintenance rider. The surcharge would let the company charge customers a fee to cover expenses involved in repairing and upgrading the system. The commission denied a request for the surcharge in 2013.

Melnykovych said that there wasn’t compelling evidence that a surcharge would decrease the amount of rate increases requested by the utility.

“With a rate increase requested every two years, we didn’t see much of a point in a rider,” Melnykovych said during a question-and-answer session.

Kentucky American Water, water provider for Lexington and 10 nearby counties, applied for the increase in January to reportedly recoup $79 million for improvement to facilities, including a $15 million filtration building. The utility claimed in its application to the Public Service Commission that the increase was needed to maintain the system’s aging infrastructure.

If approved, this will be the fifth rate increase for the company since 2007. The Public Service Commission approved a 10 percent increase in 2013, a 29 percent increase in 2010, 17 percent in 2009 and 15 percent in 2007.

WKYT reported that the rate hike would place Kentucky American Water in the top 30 most expensive water services, according to a survey from the watchdog group Food and Water Watch.

The public may comment at a formal hearing regarding the case at 9 a.m. July 13 at the PSC office in Frankfort. The PSC must make a final decision about the rate increase by November.

The Public Service Commission will post video of Tuesday’s meeting on its website. Additionally, it released a video in 2013 explaining how the process of rate-making is decided.