Water utility sends city scrambling

Lexington is getting another painful reminder of why most water utilities are controlled by the public.

We already get monthly reminders when we open water bills that are grossly inflated by the cost of a new $164-million treatment plant and pipeline that may never be needed.

Now investor-owned Kentucky American Water has given six months notice that it's ending its contract with the Lexington-Fayette Urban County Government to collect sewer, landfill and water quality (storm water) fees for the city.

Water and sewer bills are natural companions because sewer bills are based on water consumption. Kentucky American was paid $1.6 million a year under its latest billing contract with the city.

Lexington officials, who thought Kentucky American would give them a year to make the change, are scrambling to put out a request for proposals for a new contractor to take over the billing by the end of March.

This disruption comes at a particularly inopportune time. The Gray administration is struggling with a host of inherited problems.

Also, the city desperately needs an uninterrupted flow of revenue to pay for court-ordered repair of the sanitary sewer system which is polluting area streams and private property.

City officials are under the impression that Kentucky American didn't want to make computer upgrades necessary to continue the city contract. Kentucky American says separating out its bill from the city fees will reduce customer confusion.

Perhaps that's true. It also means that ratepayers will be paying for two billing systems when one has worked in the past.

At any rate, neither the overbuilt infrastructure or the redundant billing would be a problem if Lexington, like the vast majority of cities its size, owned and controlled its water utility.

Meanwhile, American Water, Kentucky American's New Jersey-based parent, says the company's third-quarter profits were up 2.3 percent — in part because rate increases more than offset declining water consumption.

That's certainly true in Lexington where rates have gone up while demand has been flat or declining.

With the addition of the treatment plant in Owen County and 31-mile pipeline, Kentucky American last year on average produced at only 45 percent of its capacity, according to the Bluegrass Area Development District's 2011 Rate book. (www.bgadd.org/pdf/2011Ratebook.pdf)

In other words, we're paying a bundle for the comfort of knowing we'll be able to water our lawns 24/7 during a drought of record.

Lexington voters, who rejected city purchase of the water utility in 2006, continue to pay the price.

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