May 282013

Statement regarding corporate entity Kentucky American Water’s proposed rate increases on Fayette Urban County citizens.

(Editor’s Note: Great job Jim!)

“Thanks for holding this hearing tonight.


  • You are right to scrutinize this request from Kentucky American Water for another rate increase.


  • You are right to make it convenient for people to comment by coming here.


  • And you are right to make this process more transparent.


I was a businessman for almost 40 years. So naturally, business is part of my DNA.


  • As a businessman, I’ve made good business decisions, and I’ve made bad business decisions.


I can tell you Kentucky American is making bad business decisions. Decisions that are bad for the citizens of Lexington .


  • The decision to build the plant in Owen County was a bad business decision. Industrial demand is what drives water consumption. Industrial demand and consumption are declining all over the country. Conservation is the key strategy.


When I was in business and made bad decisions, I had to pay for them.


  • Kentucky American is not paying for its bad decisions. It is asking the Public Service Commission to make Lexington citizens pay for them.


  • It is asking you to sanction their bad decisions.


  • Lexington citizens are getting pretty tired of this.  I sent out a notice to encourage people to come to this meeting and got back an earful.


Where have these bad business decisions led?


  • As customers we are all paying 71 percent more for water than six years ago after three rate increases … and now Kentucky American is asking you for another increase.


  • The reason for all these increases is the $164 million treatment plant that opened in 2010 … Kentucky American insisted on building the plant even though its customers are using less water … that’s a bad business decision.


  • This project was sold to the PSC as a regional solution. But no other cities bought in. So now, Kentucky American is buying small water plants and selling those customers its excess capacity from the Owenton plant and asking Lexington to help pay for that expansion, too. It’s happening right now in Owenton. Nicholasville and Paris may be next.


  • Lexington gets a triple whammy


o                   We are asked to pay higher and higher rates.


o                   We are asked to help pay for Kentucky American’s efforts to sell its excess capacity.


o                   And we are asked to pay for a Kentucky American decision that is already costing the city $3.2 million this year alone.


Ø                  Let’s delve a little deeper into this bad business decision.


Ø                  Kentucky American chose to stop billing for the city’s water, landfill and sanitary sewer fees. Irresponsible corporate decision making. And, more importantly, it is irresponsible and outrageous civic behavior.


Ø                  We were paying Kentucky American $1.5 million a year to do the billing for us.


Ø                  We project that decision will cost Lexington $3.2 million this year, including $2.1 million in lower collection of fees, $700,000 in annual increased billing expenses and $400,000 in implementation fees this first year.


Ø                  As we move forward, this irresponsible corporate decision could easily cost our taxpayers millions every year.


Ø                  Now Kentucky American wants their Lexington customers to make up for the money the company lost when it decided not to continue our billing … in other words, to pay for another bad business decision.


Ø                  Although I try to separate issues related to Kentucky American I can say this was the single-most anti-Lexington action I have seen in a corporate citizen of our City … and this corporate citizen promotes itself as operating in the public interest.


  • I am asking the Public Service Commission:


    • To say NO to this latest rate increase in its entirety.


    • To say NO to Kentucky American’s request to automatically pass along the cost of capital spending, chemicals and electricity without PSC approval.


    • And, most importantly, I am asking the PSC to step back, take a look at this company’s recent actions, and consider at what point we stop paying for all of Kentucky American’s bad decisions?


Thank you.”


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  3 Responses to “Mayor Jim Gray’s remarks before Public Service Commission”


  2. I do not relish being vindicated by the position I took when running for city council in 2004 where I was in favor of the citizens of Lexington owning their water distribution. I warned that KWA was unscrupolous and contend to this day that they corrupted the election of that year but unprecedented funding of candidates that would benefit them by voting to oppose the condemnation proceedings that prior council had been previously pursuing. A corporations loyalty and fudiciary responsibilty is too its share holders … it has no loyalty to the citizens and is not concerned own iota with the public interest. This is proven by their decissions (poor business decissions and irresponsible as they may be) and the fact they want Lexington citizens to bare the cost of their poor judgements and actions soley for the purpose of keeping their share holders and executives (that no doubt make grossly overpaid incomes). I remember speaking with one person where I warned that if we allowed KWA to continue to use Lexington as its personal cash cow … that our rates would go up an amazing percentage in a few years … 30 or more percent … I was wrong … it is 70+ percent. I filed a complaint the Election Campaign Finance Board complaining about KWA’s egregious maniplutions and corruption of the Council Election process. Two of the five members of the ECFB had to recuse themselves because they had dealings with KWA; leaving 3 to barely establish a quorum … the 3 disregarded the evidence and predictably decided there was not subtance to the allegations. The H-L reported this a “unanimous decission” and left out that it was not a full board or that 2 of the members had to recuse themselves because of affiliations with KWA. One of the ethical and legal charges that implicates corruption is that money is contributed to a campaign toward a known end of vote … whereby the persons have business before the council by which they would benefit. The truth has demonstrated that certain persons have indeed benefitted after giving said donations for a vote to end the condemnation proceeding against KWA …
    I am inclined to write the Governor and Secretary of state to ask for a review and audit of the ECFB in this manner given that fruition of the allegations has manifested … though I do not have full trust that it will go anywhere or do anything toward ending the corruption that corporations beset our citizenry with. I applaud Mayor Jim Gray, with North of Center for standing up against KWA and for the citizens of Fayette County … and am happy that he has asked the PSC to hold KWA to task for its poor performance and business decissions that have negatively impacted the citizens.

  3. We need to take our water company back and give the ownership back to Lexington!!!

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