Kentucky American Water filed an application today with the Kentucky Public Service Commission requesting a general rate increase for its customers. The request is driven by the approximately $58 million in capital investments the company has made since last filing for a rate increase nearly three years ago, in February 2010.
The company’s request, if granted in full, would increase the average residential customer rate by $5.76 per month -- from the current average of $32.75 per month to $38.51 per month -- based on an average monthly usage of 4,500 gallons. Even with this proposed increase, the cost of tap water for residential customers would remain at less than one penny per gallon, with the average residential customer receiving a day’s worth of quality tap water for approximately $1.27.
Among the capital improvements in local infrastructure included in the rate case are upgrades to the company’s water distribution systems, such as replacement of aging water mains and manually-read water meters, and improvements to water treatment plants, such as the replacement of pumps. These capital investments are necessary to enhance overall customer service, improve operational efficiency and maintain reliable, quality drinking water service and fire protection for the company’s customers in portions of 10 Kentucky counties.
“We work diligently to hold expenses and rates down as much as possible, but we must make ongoing, prudent and necessary investments in our water systems so that we can continue providing reliable drinking water service and meet all federal and state drinking water quality regulations,” said Cheryl Norton, president of Kentucky American Water.
“According to the American Society of Civil Engineers, a staggering number of water utilities across the country are struggling to maintain their current systems -- much less invest in them for the future -- because they have gotten behind on making necessary upgrades,” she said. “Fortunately, the situation is vastly different for Kentucky American Water, but only because we have remained committed to making necessary water infrastructure improvements. We balance this need for ongoing, capital investment with a continual effort to become increasingly efficient in our operations, and that helps us mitigate the financial impact on our customers as much as possible.”
Today’s request seeks an increase in total revenue of approximately $12.3 million.
The Kentucky PSC will conduct an extensive review of the company’s rate application over the next several months in an open and transparent manner. Any new rates established by the PSC in this case would not be effective before July 27, 2013.
Kentucky American Water, a subsidiary of American Water (NYSE: AWK), 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.
Founded in 1886, American Water is the largest publicly traded U.S. water and wastewater utility company. With headquarters in Voorhees, N.J., the company employs approximately 7,000 dedicated professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in more than 30 states and parts of Canada. More information can be found by visiting www.amwater.com.