Politics & Government

Mayor Gray rails against proposed water rate increase at public hearing

Lexington Mayor Jim Gray introduced his budget to council members and a standing room only Council Chambers in Lexington, Ky., on April 9, 2013. Photo by Pablo Alcala | Staff
Lexington Mayor Jim Gray introduced his budget to council members and a standing room only Council Chambers in Lexington, Ky., on April 9, 2013. Photo by Pablo Alcala | Staff Lexington Herald-Leader

Lexington Mayor Jim Gray railed against a proposed rate increase by Kentucky American Water during a public hearing Tuesday evening at Bryan Station High School.

The company has asked the Kentucky Public Service Commission to increase its revenue by $12.3 million per year, or 14.6 percent. For a typical residential customer who uses 4,500 gallons and pays $32.75 a month, the increase would amount to $5.76 extra each month — a 17.6 percent increase.

The company also wants permission to adjust its rates annually to cover the cost of infrastructure repairs and price fluctuations for water and chemicals. If approved, the PSC would still conduct a limited review of the changes.

The PSC will hold a formal hearing on June 4 to consider Kentucky American's request.

Gray said Kentucky American has made poor business decisions in recent years, and now wants ratepayers to foot the bill.

"Kentucky American is not paying for its bad decisions," Gray said. "It is asking the Public Service Commission to make Lexington citizens pay for them. It is asking you to sanction their bad decisions."

In particular, he noted that Kentucky American's rates have jumped 71 percent in six years, in large part to pay for a $164 million water treatment plant the company opened along the Kentucky River in Owen County in 2010. Most recently, the company's rates increased 18 percent in 2009 and 29 percent in 2010.

A spokeswoman for Kentucky American said the latest request for higher rates reflects capital improvements made to the company's water system since the 2010 rate increase.

"Well, we totally understand that no one wishes for anything to go up, whether it be water rates, taxes, costs for other goods and services," Kentucky American spokesperson Susan Lancho said. "Which is why we are taking every step to be as efficient in our operations as possible."

About 35 people attended the hearing, which began with a presentation by PSC staff about the proposed changes and the rate-making process. At 6:30 p.m., the PSC started accepting public comment on the proposed rate increase from Gray and three other residents.

Gray lambasted Kentucky American for its decision to stop billing for the city's sewer and landfill fees, calling it "the single-most anti-Lexington action I have seen in a corporate citizen of our city."

"Now Kentucky American wants their Lexington customers to make up for the money the company lost when it decided not to continue our billing," Gray said.

The PSC continues to accept public feedback on the proposed rate increase. Comments can be emailed to psc.info@ky.gov, with the case number (2012-00520) as the subject line; mailed to Kentucky Public Service Commission, 211 Sower Boulevard, Frankfort, Ky. 40601; or faxed to 502-564-9625.

The formal hearing is scheduled for 9 a.m. on June 4 at the PSC offices in Frankfort, and is open to the public, although it could take several days. The hearing will also be live-streamed at psc.ky.gov.

The water company can implement its proposed rates as soon as July 26, but the company would have to provide refunds to its customers if the PSC later approves a smaller rate increase.

A decision by the three-person commission is due Oct. 27.

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