The proposed increase would hike the average monthly water rate by $8.02, from $15.80 to $23.82.
According to a press release from the PSC, the Water Service Corp. said in its application that they needed the additional revenue to pay for system improvements and modernization of its customer service and billing systems.
Middlesboro’s State Representative Rick Nelson said that after looking over the Water Service Corp.’s application to the PSC, he was not convinced that the company’s expenses matched the increase charge to customers.
“It seems to me that the percent they’re asking for is a lot more than the expenses that they had,” said Nelson.
According to the company’s application, the total cost of the customer service and billing upgrades is $649,970.
The water rate increase would add $769,920 to the company’s coffers — over a $100,000 more than needed to recoup those costs.
However, Vice-President of the Water Service Corps. of Kentucky, John Hoy, said that the recent press release didn’t fully explain the increased costs. He said they also needed to pay for increases in normal operating expenses, as well as new pumps, meters, fire hydrants, and more security at water treatment plants. He said the upgrades in its customer service and billing systems were only a fraction of that cost.
Hoy said that their company made a similar request for rate increases in 2004, though he couldn’t say how much.
“We believe everything we’ve included in this case is justified as a prudent investment and we’re looking to recoup costs,” said Hoy. He said they’ve also looked at other ways to cut chemical costs and that they’ve already made cuts within their company.
But not everyone agrees.
Bell County Judge-Executive Albey Brock said while he had no control over Middlesboro’s utility costs, the proposed rate increase sounded “absurd” unless it could be justified.
“That sounds like robbery to me,” Brock said.
Middlesboro Mayor Ben Hickman would not comment because he said he was not familiar enough with the matter. Council member Ronnie Carter would not comment, citing the same reason. A message left for Council member Rob Lincks was not returned.
PSC Communications Director Andrew Melnykovych said that this rate increase was not typical for utility companies.
“That is probably at the upper end of the range, if you look at all the rate requests we get,” he said.
Melnykovych said that the Water Service Corp. will testify under oath and make its case the week following in Frankfort on Aug. 19 at 10 a.m. He said the PSC had 10 months to make their decision from when the Water Service Corp. filed it in January 2009, but said the PSC would likely decide by the fall.
Clinton, Kentucky in Hickman County is facing a similar situation. Their water rates are increasing from by $11.59, from $22.81 to $34.40. The Hickman County Fiscal Court voted in April 2009 to oppose the request for a 50.8 percent increase.
Nelson said that he asked the PSC to come to Middlesboro to voice concerns over the rate increase. That public forum will be held Wednesday, Aug. 12 at 5:30 p.m. at the Middlesboro Community Center. Anyone who has comments regarding the rate increase may speak at the meeting. Written comments will be accepted at the meeting. The comments may also be mailed to the PSC at P.O. Box 615, Frankfort, KY 40602, faxed to 502-564-9625 or e-mailed from the PSC web site.
Stephen Woodward is a Staff Writer for the Daily News. He may be contacted at swoodward@middlesborodailynews.com.
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