Officials with the Martin County Water District asked for a rate increase this week of about 18 percent, just five months after winning approval for a rate increase that was meant to stave off the district’s impending financial collapse.
The proposal, made Tuesday during a hearing before the Kentucky Public Service Commission, is a continuation of a requested 49.5 percent rate increase the district filed in January.
The PSC, which regulates most utilities in Kentucky, approved a 17.5 percent rate increase in that case in March, along with a surcharge of about 10 percent to pay down the district’s debt. Together, those increases raised the average monthly bill by $11.17 for the district’s roughly 2,900 customers, according to the PSC.
Water district officials told the state Tuesday that the previous increase is not enough, and that without more cash, the district will eventually collapse.
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Martin County Water Board Treasurer Jimmy Kerr said asking for the increase “makes me ill” because of the financial implications it could have on residents of the county, where one third of residents live in poverty, according to the U.S. Census Bureau.
“I know who it hurts, and I hate to even ask,” Kerr said. “(But) without the rate increase, we will never be able to give the people of Martin County the water system that they want. It just won’t happen.”
According to testimony during Tuesday’s hearing, the district’s debt has increased from about $900,000 in March to over $1 million. The district’s water loss rate — the percentage of clean water that leaks from pipes before reaching customers — also increased, from about 64 percent to 72 percent.
“From a financial perspective, that’s catastrophic,” said PSC chairman Michael Schmitt.
The district has long struggled to pay its debts, fix leaking service lines and perform basic maintenance.
Attorney General Andy Beshear announced in June that his office’s Department of Criminal Investigations and Office of Rate Intervention will investigate the district’s current and past management. Beshear’s office has not yet released any findings.
In June and July, the district was especially strapped for cash after American Electric Power told the district it would stop providing power unless the district paid all its electric bills that were more than 90 days past due.
That amounted to about $30,000, officials said. Other financial obligations, including insurance payments and payroll, also added to the district’s recent troubles.
The water board has stabilized the district’s finances “to a point,” Kerr said, but “it can’t continue this way.”
“Without (a rate increase), we’re being set up to fail,” Kerr said. “I asked that a decision be made very, very soon.”
Kerr asked the PSC to approve a rate increase that would total the 49.5 percent requested in January. He said rates should have increased gradually over the past 20 years, but that previous water district managers failed to seek rate increases.
A staff report by the PSC in May recommended a total increase to base rates of about 24 percent, which is 6.5 percent more than the PSC granted in March.
Nina McCoy, chairwoman of the Martin County Concerned Citizens advocacy group, said she supported the previous surcharge to pay off the district’s debt. Members do not support any additional rate increase, she said.
McCoy and other residents have often complained about the quality of water provided by the district, saying it can cause rashes and sometimes comes out the tap discolored.
During Tuesday’s hearing, Schmitt read notes from residents who complained about the district and the proposed rate increase. The responses were published in the Mountain Citizen, a newspaper based in Inez.
“Oh my goodness, not another rate hike for our cancer water,”’ one respondent wrote. “(The district) can’t seem to keep up with any money they already got. On top of that, they sure can’t deliver safe, clean water in a constant supply. Why should we be the ones to pay?”