Lexington, Ky. – Kentucky American Water is asking for a rate increase in order to pay for approximately $79 million the company is investing in water system improvements.
The utility filed an application with the Kentucky Public Service Commission to adjust the rates its customers pay for water service. If approved the rate request would result in the water bill of the average residential customer using 4,130 gallons per month from $34.38 to $40.38 – a 17 percent increase.
The utility’s last request for a water rate increase was in December 2012.
Among the projects the rate increase would help pay for 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.