Kentucky Public Service Commission Approves Wholesale Water Rate Increase for Western Rockcastle Water Association, Inc. and Kentucky-American Water Company

Strategic Insights -

The Kentucky Public Service Commission has approved a revised wholesale water rate for the city of Mt. Vernon, increasing the rate by 16.04% to $3.40 per 1,000 gallons for Western Rockcastle Water Association, Inc. and Kentucky-American Water Company. The rate increase is intended to finance a $4,142,000 project to add a new Powdered Activated Carbon (PAC) Reactor Basin and feed equipment to the Water Treatment Plant, aimed at improving drinking water quality and minimizing taste and odor incidents.

Key Takeaways:

  • The city of Mt. Vernon filed a revised tariff sheet with the Commission on June 6, 2024, proposing a wholesale water rate increase to $3.40 per 1,000 gallons for Western Rockcastle Water Association, Inc. and Kentucky-American Water Company, representing a 16.04% increase from the current rate of $2.93 per 1,000 gallons.
  • The Commission suspended the proposed tariff revision on July 12, 2024, for a period of five months, and Mt. Vernon timely responded to one request for information from Commission Staff before filing a notice on November 11, 2024, that the record was sufficient for a Commission decision.
  • The Commission found that the proposed rate increase is fair, just, and reasonable, based on evidence that the amounts used by Mt. Vernon to calculate the proposed rate are reasonable and known and measurable.
  • The Commission approved the wholesale rate increase to $3.40 per 1,000 gallons, effective December 13, 2024, and required Mt. Vernon to file new tariff sheets with the Commission within 20 days of the date of service of the Order.
  • The total project cost for the new PAC Reactor Basin and feed equipment is $4,142,000, and the rate increase will finance the project.

Statistics:

  • The proposed wholesale water rate increase for Western Rockcastle Water Association, Inc. and Kentucky-American Water Company is 16.04%, representing a change from the current rate of $2.93 per 1,000 gallons to $3.40 per 1,000 gallons.
  • The total project cost for the new PAC Reactor Basin and feed equipment is $4,142,000.
  • Mt. Vernon's proposed rate increase is based on 2023 financial performance adjusted for known and measurable items, including pending in-service dates for capital projects and the commencement of related debt service.

Sources:

  • "Electronic Tariff Filing of the City of Mt. Vernon to Increase its Wholesale Water Rates to Western Rockcastle Water Association, Inc. and Kentucky-American Water Company" (Case No. 2024-00217, Order dated December 13, 2024)
  • Mt. Vernon's Tariff (filed July 3, 2024)
  • Mt. Vernon's Responses to Commission Staff's First Request for Information (filed August 13, 2024)
  • Simpson County Water District v. City of Franklin, 872 S.W.2d 460, 463 (Ky. 1994)
  • City of Danville v. Public Service Comm'n, et al., Civil Action No. 15-CI-00989, Opinion and Order (Franklin Circuit Court Division II, June 14, 2016)