The promised influx of a $2 million federal grant to a struggling Eastern Kentucky water district has spurred hope among local officials and customers that its unusually high water rates might eventually decline.
Southern Water and Sewer District, which serves about 5,400 customers in Floyd and Knott counties, has been in a state of financial turmoil that reached its peak in March, when officials said it was just weeks away from running so low on cash that it wouldn’t be able to make payroll.
Last week, Gov. Matt Bevin and U.S. Rep. Hal Rogers, R-Somerset, said the district received approval for a $2 million grant from the Abandoned Mine Lands Pilot Program to replace its aging meters. So many of the meters are old and unreliable that state regulators ordered the district to stop checking them earlier this year, and instead instituted a $58 flat monthly rate.
“It puts us in a much better position,” Jeff Prater, chairman of Southern’s water board, said of the grant. “We can get the meters changed out and get people back on a volume billing.”
Ted Shelton, a retired coal miner who lives along Beaver Creek in McDowell, in Floyd County, said he is mostly content with his water service through Southern, but said his water goes off about once a month for a day or two because of frequent line breaks.
He also said the recent rate hike — his bill jumped from about $35 a month to the new $58 flat rate — was “too much, but you’ve got to have water.”
“Everyone I know thought it was too much,” he said.
Shelton switched from well water to Southern’s service in the mid-80s, but said he will consider going back to well water if rates go up even further.
State regulators recently recommended billing adjustments to pay for new meters that would increase rates for Shelton and other Southern customers. If the recommendation goes into effect, the flat rate would decrease to $55.17 for residential customers, but the district would also tack on a $5.25 surcharge.
That recommendation is pending. It received a cautionary response from the Office of the Attorney General, which said the recommendation “if approved, may well be the highest retail water rates in the commonwealth.”
“Approving such high rates in addition to recommending a Meter Replacement Surcharge compounds the impact on Southern’s customers, who are already paying for the mismanagement, poor planning, and neglect of the system shown by past District leadership,” the office said in its response.
Prater, the Southern board chairman, said the grant announcement likely won’t impact the Public Service Commission’s decision to approve the recommendation, but it may cause the commission to revisit the case after the district actually receives the grant money in the next six to eight months.
Southern is one of several Eastern Kentucky water districts suffering from extraordinary rates of water loss. Leaking lines, faulty meters and other infrastructural failures cause many districts to lose more than 30 percent of the water they clean before it reaches customers.
Last year, Southern reported losing 62 percent of its water. Officials said the district has brought that down to the low-50s since the beginning of 2019.
Prater said he believes much the district’s water loss comes from faulty meters, which don’t accurately read how much water customers use. The unreliability of meters also makes it difficult to find leaks and other line failures, he said.
With the $2 million grant, Southern will be able to offset some of the costs of replacing meters that customers would otherwise have to fund, he said.
“This grant gives us a tremendous opportunity to improve the Southern District without asking the customers to pay more,” Prater said. “It allow us the tools and the means to actually start addressing the water loss and the long term problems.”
Floyd County Judge-Executive Robert Williams, who helped push for the grant in Frankfort, said improvements like the ones funded by the grant are critical to attracting businesses and promoting a better economic future in Eastern Kentucky.
“If we don’t have quality infrastructure, we can’t get these businesses to locate here,” he said. “I have business that want to locate on U.S. 23 between Prestonsburg and Pikeville that won’t move there because they don’t have sewer lines.”
In addition to attracting businesses, Williams said the grant will, in the long run, help low-income and elderly customers who are struggling to afford the district’s high water bills.
“It’s going to go toward getting these costs back down for these customers,“ he said. “You take someone on a fixed income, like my mom and dad, $60 a month is a lot of money.”