Kentucky American wants Midway to pay 21.5% more for water; mayor says he will object, calls hike 'absurd'

Kentucky American Water Co. is asking the state Public Service Commission for rate increases, including a 21.5 percent in the fee for wholesale customers such as the City of Midway. Mayor Grayson Vandegrift told the Midway Messenger that he would oppose the increase.

"I will absolutely be speaking publicly against this rate increase," Vandegrift said in an email. "It is absurd for them to ask for another rate increase right now."

Kentucky American last filed for rate increases in 2016. The PSC gave it about half what it sought; for the company's direct residential customers, that was a 9.2 percent hike. Midway's water system did not pass the increase along to its customers. "I'm not sure if we'll be able to do that again," Vandegrift said.

At its meetings in December, the outgoing City Council is to consider an ordinance that would reduce sewer fees by 2515 percent, because the city has reduced its sewer expenses with an early payoff of the bond issue used to build the wastewater treatment plant. Vandegrift said he has changed the cut from the original 25 percent on the advice of Council Member Bruce Southworth, chair of the Public Works and Services Committee, but still hopes for an additional cut to make the total 25 percent.

The sewer and water funds are separate, but billed together. "On average, the sewer bill is about 35 percent of the overall bill, when you factor in garbage too," Vandegrift said. In August, the council increased garbage rates 15.4 percent for residential customers and 29.6 percent for businesses, passing along increases from contractor Rumpke Waste & Recycling.

The increase for Kentucky American would be the company's sixth in 11 years, the Lexington Herald-Leader reported. The PSC process includes public hearings, and takes six months to a year.

The company says it is spending more than $100 million improving its system and needs a rate hike to cover those costs. “These investments are necessary to maintain and enhance service, water quality, system reliability, and fire protection capabilities for customers while still keeping the cost of water service for most residential customers at about a penny per gallon, usually their most affordable utility bill,” it said in a news release.

“We have approached infrastructure replacement in as proactive a way as possible,” Kentucky American President Nick Rowe said, “but more investment is still required in order to address the continual need for system renewal.” The news release listed "major capital projects," including work at the company's largest treatment plant, on the Kentucky River in Fayette County and "the replacement of 9.5 miles of aging water pipes in the region since the last rate increase took effect in 2016." It didn't say where those were.

“In addition to focusing on these and other capital improvements, we are committed to containing operational and maintenance expenses as much as possible, too, in order to keep rates affordable for our customers,” Rowe said. “We have done this by implementing efficiencies and leveraging technology throughout our operations. We will continue to work toward becoming even more efficient without sacrificing the safety of our teams or the level of service we provide.”