The recent editorial regarding Kentucky American Water's decision to exit its billing contracts with the Urban County Government portrayed our company and our business decision inaccurately. I would like to correct the record.
We have provided billing and collection services for the city's sanitary sewer fees and landfill user fees for many years and, two years ago, entered a contract to bill and collect Lexington's water-quality management fees, as well. All of these fees are included, along with water service, taxes and other fees on the Kentucky American Water bill for most of our Fayette County customers.
We periodically review our processes to maximize efficiency and productivity and to achieve the best value for our customers. These billing service agreements made good business sense for us and the government when they were established, but times have changed. For many reasons, we think that billing contracts such as these are no longer a good fit for our company.
First and foremost, we have found that many customers are confused by their water bills since they contain so many and various utility fees on them. For many of our customers, 50 percent or more of each Kentucky American Water bill relates to sewer charges and other fees, not water service.
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Second, a state Public Service Commission decision last December clarified the way we must apply customers' payments to their accounts, modifying the collection process we follow. This process change further heightened confusion for many of our customers.
Finally, our company is implementing substantial upgrades to its information systems. For the previously mentioned reasons, along with the costs it would impose on our customers, we have determined that we do not wish to buy additional functionality in these systems for managing contract billing services.
While we recently provided the required six-month notice regarding our decision to exit providing such billing services for the Urban County Government, our discussions with the city since last December's PSC decision have included this topic. Additionally, I have committed our company to assist the city through the transition.
The editorial also conveyed a gross misunderstanding of the true value of our Owen County water treatment plant placed into operation one year ago.
The editorial indicates this plant was not needed, which is contrary to the voluminous data provided by our company, other regional water providers, government regulators and many experts in this field over the past 20 years, which supported the need for such a water supply solution for customers' needs today and in the future.
In closing, the editorial also noted the administration is dealing with inherited problems. One of them, the crisis in publicly owned sewer systems due to years of neglect, now requires substantial public funding for required repairs. Yet, the editorial resurrects the widely rejected idea that Lexington's water system should be publicly owned, which would subject the water system to the same long-term underfunding and neglect.
Kentucky American Water invests about $20 million a year in our water systems to make appropriate upgrades on a regular basis. As a result of this disciplined, consistent approach to infrastructure investment, made possible by our publicly regulated investor-owned model, Lexington's water utility infrastructure is not one of this community's "inherited problems."