Commonwealth Journal

Local News

February 12, 2011

Southeastern Water Board: Rate hike was necessary

Somerset —

Angry Southeastern Kentucky Water Association customers made their concerns about a recent rate hike known during Thursday’s board meeting, but they didn’t get the answers they’ve been seeking. “We can’t buy our water anywhere else, we’re stuck,” said customer Lonnie Davis. “We can have all these meetings and we can all voice our opinion ... at the end of the day, I think we’re pretty well screwed because there’s nothing we can do about it.” They did, however, hear from a board who said they didn’t come to the decision to raise water rates for the association’s 7,000 to 7,500 customers lightly. “Folks, we’re not the enemy,” said board member Joe Crawford. “A lot of you are aggravated at us because of some of the decisions we’ve made and I understand. “... We did not make any of these decisions lightly,” Crawford continued. “You’ve got people sitting around this table here who’s lost a lot of sleep way before now ... looking at this and trying to figure out how we can try to keep it as cheap as we can as long as we can.” More than 50 customers crowded into the water office, located on East Somerset Church Road, to demand answers from the association’s board stemming from recent significant rate increases put into place. According to the documents provided by the PSC and the water association, residential water customers, or those with 5/8 and 3/4-inch meters, are looking at a minimum bill of $23.25 for the first 2,000 gallons of water used in the billing cycle. That’s an increase of $7.75 on the minimum base charge alone. After the minimum usage is met, residential customers will be charged $9.95 for each additional 1,000 gallons of water used, up from $6.50 per an additional 1,000 gallons. Those increases are even sharper for customers using meters larger than residential meters. Customers with 1-inch meters are now paying $53.10 minimum for the first 5,000 gallons of water used, customers with 1.5-meters are paying $102.85 for the first 10,000 gallons of water used, and customers with 2-inch meters — which include many of the volunteer fire departments serviced by Southeastern Water Association — are paying $202.85 for the first 20,000 gallons used. That has been a sticking point for the fire departments, as some saw their bills jump up more than $150, even though they used a minimal amount of water during the last billing cycle. The charge for 3-inch meters is $301.85 minimum for the first 30,000 gallons used, customers with 4-inch meters pay $500.85 for the first 50,000 gallons used and those with 6-inch meters are paying $998.35 for the first 100,000 gallons used. The additional charges remain the same as residential charges, at $9.95 per an additional 1,000 gallons of water used. “That seems excessive all at once,” said water association customer Josh Cimala. “At my business, if I did a 51 percent increase, I wouldn’t be in business at the end of the year.” The board, and engineer Carlos Miller, said the hike was necessary to cover the association’s incurred debt, to pay for the loan for a major project over the next 40 years — and to replenish the company’s depreciation fund, which is essentially money set aside used for ongoing maintenance on infrastructure through the years. “The depreciation ... it’s gone,” Miller said. Still, that answer wasn’t acceptable for many, who said the company never should have sought out such a loan in the first place. “I do know, in this community, in this county, there were a lot of people that were living just to the check, and if they just got a $30 increase, they’re in trouble,” Cimala said. According to a press release from the association’s attorney, D. Bruce Orwin, the company lost more than $600,000 last year. “This board, trying to hold their rates down, didn’t install those rates,” Miller said. “ ... I told them, ‘It’s going to bite you one of these days. You all cannot keep doing that.’ “Now, it’s hitting all at one time, whereas, if they had raised the rates as they should have all along the way, you would still be where you are, but the increase might not have been as much.” Miller continued. But Orwin said the association could’ve better handled informing its customers about the increase. “As far as getting the word out to the membership, explaining it to people, it was mismanaged,” Orwin said. “ ... I should have realized that something that’s this big, is this much of a change, is going to be something that is very serious and have a serious impact on people.” Many of the customers in attendance at Thursday’s meeting agreed, saying some type of note sent along with their bills or a letter would’ve helped better inform them. Orwin suggested that the association develop an e-mail network with its customers for future developments, and he said the company and its members may benefit from a Web site as well. Still, customers on Thursday asked that the company take steps to lower rates that have left them scrambling to cover their water bills. “Why?” asked customer Edna Pierce. “They went up, they can go back down. “You’ve doubled and tripled,” she added. “How much more do you want?” The association is currently beginning a major infrastructure improvement project that will cost a total of $5,670,000. The association plans to finance the project partly through a 40-year U.S. Department of Agriculture Rural Development loan of $3,995,000 with a 2.35 percent interest rate. The remainder of that will be financed through grants. The improvements include a 200,000-gallon elevated water storage tank, a 100,000-gallon elevated water storage tank, two new booster pump stations, around 33,240 linear feet of 12-inch diameter water lines, approximately 15,300 linear feet of 8-inch diameter water lines, approximately 44,700 linear feet of 6-inch diameter water lines, around 7,000 linear feet of 4-inch diameter water lines and around 2,950 linear feet of 3-inch diameter water lines. The company went before the Kentucky Public Service Commission in December seeking approval of the rates — which they received. But the PSC only has the power to “rubber stamp” a rate increase when a federal loan is involved. Orwin has emphasized that the association operates in difficult terrain that requires much more maintenance — and more money — to keep its system reliable and modern. “You cannot compare rates between water utilities,” Miller said in answer to customers’ questions about other water providers’ lower rates. “You can have low rates, but you may have a lousy system. “There are systems out there that have low rates, but they’re coming apart,” Miller also said. “If you want a good, reliable, safe water system, it costs to maintain it.” Representatives with several local volunteer fire departments also attended Thursday’s meeting. Although some discussion was made about those departments’ significant increases, no solution was met. The board agreed to meet with the Pulaski Fire Commission at its next meeting later this month.

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