First rate increase request since 2012
LEXINGTON, Ky. (Jan. 29, 2016) —Kentucky American Water filed an application with the Kentucky Public Service Commission today to adjust the rates its customers pay for water service. The utility’s last request for a water rate increase was in December 2012.
Kentucky American Water’s investment in water system improvements of approximately $79 million is the primary driver behind the rate request. Among these improvements is a $15 million filtration building currently under construction at the utility’s Richmond Road Station water treatment plant in Lexington. The building replaces the current filtration structure built in 1924. The Kentucky PSC approved in December 2014 the construction of the new facility, which is scheduled to be completed and placed into operation this year.
Additional water system capital improvements covered in this case include the replacement of aging water mains and the replacement of aged, less-efficient pumps. These improvements help to enhance service quality and reliability, environmental performance and fire protection.
Rates will not change until the Kentucky PSC completes a comprehensive review of the request and then makes a determination. This thorough, transparent process lasts several months, allows for public comment and includes public hearings.
“Since our last rate case, Kentucky American Water has continued to implement efficiencies and best practices throughout the business to reduce our operations and maintenance expenses,” said Kentucky American Water president Nick Rowe. “This has enabled us to keep our operating expenses virtually flat since 2012. We have done so while also remaining focused on providing quality service for our customers and making appropriate system improvements.”
The need to upgrade water systems is a national challenge. The American Society of Civil Engineers says that an estimated $1 trillion in capital spending will be needed across the nation over the next few decades to replace thousands of miles of pipe, upgrade treatment plants and comply with stricter water quality standards.
Kentucky American Water’s rates are based on the cost of providing water service as reviewed and approved by PSC. The company is requesting through today’s filing a general increase in revenue of about $13.5 million per year. If approved, the rate request would result in the water bill of the average residential customer using 4,130 gallons per month to increase from $34.38 to $40.38, which means water service would cost on average about a $1.30 per day.
“The communities we serve in portions of 11 counties rely on us to provide reliable, quality water service to support their local economies and to provide a high quality of life for residents,” Rowe said. “The investments we make in our systems help ensure that we are able to fulfill that commitment to the health and prosperity of our customers and communities. We also understand the importance of keeping rates as low as possible for our customers, and therefore the operational efficiencies we continue to seek out and implement are helping us do just that.”
Kentucky American Water, a subsidiary of American Water , is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately half a million people.