Water future: Promised utility commission must begin work

Dustin Miller and son, Davis, went fishing in Jacobson Park on Father's Day. Kentucky American Water has leased the park to Lexington until 2018, when the utility's franchise agreement with the city expires.
Dustin Miller and son, Davis, went fishing in Jacobson Park on Father's Day. Kentucky American Water has leased the park to Lexington until 2018, when the utility's franchise agreement with the city expires.

At issue | July 1 Herald-Leader article, "Water plant on target; supply worries will end, but who will pay the bill?"

During his successful campaign for mayor of Lexington in 2006, Jim Newberry acknowledged the need to begin the process of sorting out and advocating the important issues involved in our upcoming negotiations with Kentucky American Water regarding the extension of the 20-year franchise due to expire in 2015.

Mayor Newberry promised that he would create a utility commission to begin studying the extensions of utility franchises, including water service. This was a good idea in 2006 and it remains a good idea now to prepare for the important discussions that will materialize in the near future.

Newberry said on his campaign Web site in 2006: "If the referendum (to purchase the water system) reflects that Lexingtonians oppose condemnation, I will: Seek authorization from the Urban County Council to create a utility commission so that the commission could identify the business and regulatory steps necessary for LFUCG or local cooperatives to acquire utility assets if and when those assets are available for sale.

"The utility commission would also advise the LFUCG as to what terms should be incorporated into future franchise negotiations, including rights of first refusal in favor of the LFUCG."

That's pretty much all we've heard from the mayor on the subject since his last campaign.

Meanwhile, the clock has continued to count down the time available to prepare for negotiating a new franchise agreement.

State law, KRS 96.010, requires: "the legislative body of each city shall provide for the sale of a new franchise to the highest and best bidder on terms that are fair and reasonable to the city, to the purchaser of the franchise and to the patrons of the utility."

The city of Lexington, when granting the first franchise to the predecessor of Kentucky American Water in 1883, insisted on a provision in the agreement that the city retain a right to buy the assets of the water company on specific dates based upon appraisals.

The right was continued in every franchise until the renewal in 1975 when no agreement was made, because there was an Urban County Government. The water company then relied on the county franchise which had no such provision.

I was mayor from 1972 to 1978 when the county franchise was renewed. We should have picked up that issue and continued to insist on the right of the new government to buy the assets.

But it was not on our radar screen while the Urban County Government was being created and everyone was concentrating on making it work.

At that time, the government was extending sanitary sewers, dealing with urban renewal, building the civic center, airport terminal, new jail and many other matters. Also in 1975, Kentucky American Water had local managers and board members. Its ownership was domestic and not international.

Regardless of how we got here, our government officials, business leaders and citizens need to begin now to get educated on this subject so that we can have an agreement ready. It would certainly be in the best interests of Lexington for the utility commission to make known the fact that the franchise is due for renewal in the event there are others interested in pursuing the franchise.

A little competition for our business would be a good thing for Fayette County ratepayers.

We must not wait until the 11th hour when pressure can produce bad decisions. In fact, there is no legal impediment to creating a new franchise agreement before 2015. I urge Newberry to seek council approval as he promised he would to create the utility commission.

If he delays or refuses, I would urge the council to create such a commission.

The end result of having a utility commission is the likelihood that we will end up making decisions that benefit the citizens of Lexington. Otherwise, our decisions are most likely going to benefit Kentucky American and only Kentucky American.